Number of Investment Advisers Hit Record High in 2022

The number of investment advisers in the U.S. hit a record of 15,114 in 2022, even as assets under management declined for the first time since 2008, according to an annual report by the Investment Adviser Association and National Regulatory Services, a Comply company.

The country added 308 fiduciary advisers, or 2.1% more than last year, in part to meet demand for people looking to navigate turbulent markets, according to the annual Investment Adviser Industry Snapshot. The report, in its third year, is drawn from investment advisory data filed with the Securities and Exchange Commission on Form ADV Part 1A.

“Investors are increasingly engaging investment advisers, which continuously provide investment management advice as fiduciaries,” Karen Barr, the CEO and president of the IAA, said in a statement. “Over the past five years, over 22 million more individuals have engaged an investment adviser for asset management—a rate of growth in both the number of individual clients and assets of roughly 12% per year.”

The growth came even as market conditions brought assets under management down 11.1%, only the third drop in the past 22 years; the other drops occurred during the 2008 financial crisis and burst tech bubble of 2002. 401(k) accounts were also hit by market declines, with retirement benefits firm Alight reporting a 14.7% drop in the median return for investors in defined contribution plans last year.

Investment advisers managed total assets of $114.1 trillion last year for 61.9 million clients. Clients using asset management services grew by 2.1% to a record high of 54.3 million. The total number of clients—including those using financial planning services—declined by 4.3% as digital advice offerings evolved, according to the IAA and Comply.

While growing overall, the investment advisory industry continues to experience significant churn, according to the report, with 834 firms terminating their SEC registration. The turnover was concentrated among advisers with less than $1 billion in assets.

Last year, 88.5% of advisers had less than $5 billion in AUM, and more than half had between $100 million and $1 billion, according to the report.

The organizations also noted the impact of the SEC’s newly introduced marketing rule, which the regulator has continued to broaden and clarify as recently as earlier this month. Nearly 40% of advisers included performance information in advertisements in 2022 to comply with the rule, according to the report—though the data collection was not comparable to 2021, as it came from new questions in the filings.

Both the number of funds and assets under management continued a 10-year trend of increasing more rapidly for private equity funds than for hedge funds, according to the report. Private equity funds in 2022 accounted for 44.2% of the number of private funds and 32.8% of private fund assets.

“This year’s report underscores the diverse nature of the industry and its continued growth, most notably in terms of the number of firms and the number of private funds,” John Gebauer, Comply’s chief regulatory officer, said in a statement. “These trends are clearly having an impact on the SEC’s focus areas for examinations and rulemaking, as evidenced by the proposals made this year which aim to increase protections for private fund investors.”

The organizations noted that over the past 22 years, the growth in the number of SEC-registered advisers has been consistent with economic growth, as measured by GDP. Growth in assets under management has been affected by stock market performance.