RIA Headcount Continues to Rise

The registered investment adviser sector appears to be booming by all metrics, according to data released Thursday in a joint report by the Investment Adviser Association and consultancy COMPLY.

The number of RIAs hit a record of 15,396 in 2023, up about 1.9%, and was the twelfth year in a row in which the number of advisers grew. It’s also the first year that non-clerical employees at advisories surpassed 1 million people, increasing 3.6% when compared to 2022.

Assets under management for RIAs also grew by 12.6% year-over-year in 2023, matching a record high set in 2021 of $128.4 trillion. That came in part from a 3.7% increase in total clients by investment advisers in the year.

“Individual investors increasingly recognize the value of fiduciary advice as they seek to save and invest for retirement, home ownership, education, and other goals,” IAA President and CEO Karen Barr said in a statement with the report.

The report did note that the “industry is dynamic, with a significant number of advisers entering and exiting the industry each year,” though that is mostly among advisers managing less than $1 billion in assets.

In the past 6 years, over 24 million more people have engaged an investment adviser for asset management, a 12.8% per year growth rate, according to the report.

The IAA and Comply also noted the number of advisers exempt from Securities and Exchange Commission registration. In 2023, there were 5,390 exempt reporting advisers filing Form ADV with the SEC and 3,940 exempt reporting advisers filing Form ADV with state authorities, according to IAA and COMPLY. These advisers combined managed more than $6 trillion in private fund gross assets.

Regulatory decisions, some of which the IAA is seeking to influence through ongoing lobby efforts, may play a role in the growth among RIAs in 2024 and beyond, the report noted.

The association called out in particular the safeguarding proposal, which it has argued will unfairly force smaller advisers into more stringent custody requirements.

The report backed up the finding that most advisers are relatively small firms, with 92.7% employing 100 or fewer employees, and 69.3% of advisers managing less than $1 billion in assets.

The IAA is a trade association representing the interests of fiduciary investment adviser firms; COMPLY is a consultancy working with investment management firms.