The Investment Adviser Association (IAA) and National Regulatory Services (NRS) have published the 20th annual edition of the “Evolution Revolution” report, which compiles data on nearly 13,500 registered investment adviser (RIA) firms that collectively manage $97.2 trillion for more than 42 million clients.

IAA President and CEO Karen Barr says the updated report is very positive from the perspective of the advisory industry’s health and outlook.

“In every key metric, from industry size to assets under management [AUM] to high-quality jobs created, the investment adviser profession showed solid growth, underscoring our critical value to investors, to the economy and to our capital markets,” Barr says. “Investors continue to recognize the value of fiduciary advice, turning to investment advisers to help them achieve their goals and navigate their financial futures.”

Reflecting on the 20 years of data generated by the report, NRS President John Gebauer says the growth of the industry has been remarkable.

“In hindsight, none of us could have imagined the size and scope the industry has achieved—roughly five times the assets managed and twice the number of firms [compared with 20 years ago],” Gebauer says. “The latest revolution to hit the industry, digital advice, is driving the latest evolutions in operations and accessibility, which have led to the industry now serving over 42 million clients.”

Data from the new report shows a net increase of 3.9% for 2019 in terms of the total number of advisers registered with the Securities and Exchange Commission (SEC). There are now 13,494 firms advising on a record $97.2 trillion.

Zooming out, to meet continued demand for investment advice, investment advisers employ a total of 871,971 non-clerical workers, a 4.4% increase over the past year. According to the report, more than 450,000 of these workers perform investment advisory functions. Thus, investment advisers remain important providers of high-quality jobs to the economy, including in small businesses.

“The investment adviser profession has always been dominated by small businesses and this year was no exception,” the report states, “as over 11,800 firms—almost 88%—reported employing 50 or fewer non-clerical individuals.”

The 2020 “Evolution Revolution” report underscores the ongoing consolidation that has impacted all parts of the advisory industry—including the defined contribution (DC) retirement plan advisory niche.

“Industry concentration continued to increase this year, with a very small group of very large advisers managing the majority of all reported regulatory assets under management [RAUM],” the report explains. “The number of advisers that reported managing over $100 billion in RAUM grew by 27 advisers, to 175, or by 18.2%. Despite representing only 1.3% of SEC-registered advisers, these 175 firms collectively managed 63.8% of all reported RAUM, or $62 trillion.”

This is an increase of 24.3% compared with RAUM reported by those who managed over $100 billion RAUM last year ($49.9 trillion).

“Although the number of advisers that reported managing less than $1 billion RAUM also increased by 2.7%, this percentage increase was much lower than the percentage growth of those managing over $100 billion RAUM,” the report notes.

Another important finding in the report shows adviser compensation arrangements remained steady year over year, with virtually all of the compensation categories showing little change. Asset-based fees continue to dominate in the investment advisory profession, the report states, with 95.4% of advisers indicating this year that they are still compensated by at least some clients based on a percentage of their assets under management.

The broad adviser industry growth noted in the report has also been reflected in the DC plan adviser niche, as demonstrated by the PLANADVISER Practice Benchmarking Survey. As retirement plan adviser specialists drew up their business plans for 2020 and 2021, the vast majority are planning for growth, the survey shows. Three-quarters of respondents expect 401(k) plans to spark most of their growth, while just 51% of advisers made that projection last year. Whether the increase reflects optimism for the expansion of multiple employer plans (MEPs), or for something else that might drive plan sponsors to seek their specialist expertise, is unclear. But it is likely that such growth will owe much to advisers building on current relationships, as 93% of new clients are found through referrals.