The RIA industry hit record highs in the number of investment advisors, firms and clients in 2023, according to a survey co-run by the Investment Adviser Association.
Additionally, assets managed by SEC-registered advisors jumped by 12.6% in 2023 from the previous year’s market downturn, matching similar highs from 2021. The number of advisors grew by nearly 2%, according to the annual snapshot co-created by the IAA and COMPLY, which works with chief compliance officers at RIAs.
Last year, the number of SEC-registered firms increased by 282, hitting a record high of 15,396 firms (there have been increases in 21 of the previous 23 years, barring 2010 and 2011, though those downturns partially stemmed from the SEC increasing the minimum size threshold for registration to $100 million from $25 million).
Additionally, the number of non-clerical employees passed 1 million for the first time last year, growing 3.6%. Most employees and advisory firms are on the smaller end of the spectrum, with 88% of advisors having less than $5 billion in AUM (58.3% of that being in the $100 million to $1 billion range).
However, more than 92% of client assets were managed at firms with more than $5 billion in AUM, and 66% of assets were managed by the industry’s 207 largest firms, according to the survey.
Firms with $100 billion+ AUM saw the most robust growth over the past decade, though more than half of this growth consisted of firms expanding to this size. Employment growth was also the strongest at these firms.
Firms under $100 million declined over this period (with a 17.2% drop in the past year). However, according to the IAA, during periods of rising asset values, firms in this range either move into more significant categories or terminate their SEC registration altogether. In 2023, 1,114 new advisory firms formed, while 832 advisors ended their registrations, resulting in a total of 282 new firms.
The total number of clients serviced by registered firms jumped 3.5% to 64.1 million, despite a drop in non-asset management clients for the second straight year (which the IAA attributed to the growth of digital platforms offering non-asset management services).
Nevertheless, the total number of asset management clients hit a record high of 56.7 million in 2023, a 4.4% jump from the previous year, according to the survey. More than 85% of clients were non-high-net-worth individuals (with less than $1.1 million in AUM or net worth below $2.2 million), though 64.3% of total managed assets came from the 14.7% of high-net-worth clients.
The percentage of advisors using multiple websites or social media platforms to communicate with clients jumped to 65.2% in 2023 from 49.1% in 2018. LinkedIn continued to be the most-used social media platform, with 59.1% of respondents reporting they used it (up from 39.3% in 2018).
In 2018, 19.2% and 18.1% used Twitter and Facebook, respectively. But in 2023, more advisors opted for Facebook; 26.1% of advisors used that platform, compared to 22% using Twitter (now X). 10.8% and 10.1% used YouTube and Instagram, respectively.