Despite a volatile stock market and declines, the federally registered investment advisor industry is booming.

RIAs continued to experience healthy growth, reporting a record number of firms, client demand and employees and an increase in regulatory assets under management (RAUM) last year, according to the “2019 Evolution Revolution” report, the annual industry scorecard released this morning by the Investment Adviser Association (IAA).

“Our profession is experiencing continued growth as increasing numbers of investors recognize the value of fiduciary advisors,” said IAA President and CEO Karen Barr.

The annual report found the universe of SEC-registered investment advisors has reached a record high of nearly 13,000 advisory firms—up 3.3% from last year’s report.

Despite significant market declines in December 2018, the amount of regulatory assets reported in 2019 increased to $83.7 trillion from $82.5 trillion in 2018, a one-year growth of approximately 1.4%.

The regulatory AUM that RIAs now manage has nearly quadrupled 2001 levels. The total industry aggregate AUM/RAUM has grown 279% since 2001—a compound annual growth rate of 8.2%, the report found.

“Competition in the financial advisory space is at its highest, as the number of investment advisors and the amount of assets they manage continue to grow to record levels,” said John Gebauer, president of National Regulatory Services (NRS), a partner in the study.

“Advisors are responding to increased demand by continuing to use automation and technology to deliver the level of service advisory clients require,” Gebauer said.

In fact, SEC-registered advisors reported a total of more than 43 million clients, up 9 million from last year, which may be attributed in part to digital advice platforms having many clients with small or zero account balances. 

The vast majority of RIA clients (94.6%) are individuals rather than businesses or institutional clients, the report found.

High-net-worth individuals make up just 12.3% of total clients holding the $10.5 trillion RIAs manage on behalf of individuals. Non-high-net-worth individuals (82.2% of total clients and 87.0% of individual clients) make up the vast majority of RIA clients, the report found.

In an investment ecosystem where digital advice platforms and passive investment channels are playing greater roles, investors’ appetite for human-driven investment advice clearly remains strong, the IAA reported.

Advisors also report strong job growth, with a record total of 835,124 clerical employees—up 3.7% from a year earlier, which underscores “the investment advisor profession as a provider of high-quality jobs and an engine for small business creation and growth,” the IAA said.

The vast majority of SEC-registered investment advisors are small businesses, with 56.9% employing 10 or fewer non-clerical employees and 87.5% employing 50 or fewer, according to the report.

“This year’s report demonstrates that advisors are continuing to fuel the economy and the capital markets, providing high-quality jobs and adding new small business players in the financial services ecosystem,” Barr added.

Now in its 19^th year, the “2019 Evolution Revolution” report is an annual joint study by the Investment Adviser Association and National Regulatory Services. The report offers a comprehensive profile of SEC-registered investment advisors, drawn from April 2019 Form ADV data from 12,993 firms.

This is the first report that compares new information reported on the amended version of Form ADV Part 1, which became effective on October 1, 2017. So it offers greater clarity about the detailed business practices of advisors, including details on how they invest separately managed accounts and how they use leverage and derivatives. It also offers more accurate data about their clients.