The RIA industry hit new records for assets under management and size, according to a recent report.

According to the 2017 Evolution Revolution study, sponsored by the Investment Advisor Association and National Regulatory Services, RIAs' aggregate regulatory assets under management (RAUM) reached a record high of $70.7 trillion as of April 10, 2017.

Over the prior 12 months, RIAs grew their RAUM by 5.8 percent, up from $66.8 trillion in 2016. While growth in RAUM outpaced economic growth measured by GDP, it lagged the U.S. equities market as measured by the S&P 500.

“It looks like the industry is still growing, but this is occurring along side a general equities market that is still growing as well,” says John Gebauer, president of National Regulatory Services. “If you look at the S&P 500, it appears that advisors’ AUM growth didn’t keep up. We believe there are retirement account holders starting to draw down their accounts; that makes it hard for RAUM to grow at the same pace. Then there are actively managed funds, which are analogues for managed portfolios or separately managed accounts, which have tended to lag the pure indexes.”

Over the 17-year history of the Evolution Revolution study, RIA RAUM growth has exceeded both the growth of U.S. GDP and the S&P 500. While U.S. GDP posted 75 percent cumulative growth, a 3.8 percent compound annual growth rate, and the S&P 500 posted 95 percent cumulative growth, a 4.6 percent compound annual growth rate, advisor RAUM has grown a cumulative total of 220 percent since 2001, for a compound annual growth rate of 8.1 percent.

In spring 2017, the study counted 12,172 firms registered with the SEC, a 2.7 percent increase over 12 months. During that time, the number of workers providing investment advisory services, including research, reached 400,163 people, an increase of 13,631 – yet total employment in the industry remained flat at 778,002.

More than half of all SEC registered firms have RAUM between $100 million and $1 billion.

RIAs served more than 35.6 million clients as of April 10, with an average RAUM per client under $2 million. Most of the advisors, 61 percent, served high-net-worth individuals, non-high net worth individuals, or both. Individuals represented $8.9 trillion of the total $70.7 trillion RAUM.

Many advisors, 45.6 percent, reported that at least one client was a pension or profit-sharing plan. These clients accounted for $6.2 trillion of the total $70.7 trillion RAUM.

Almost all of the advisors, 87 percent, reported that the majority of their clients were attributable to a single category of client, with 51 percent of advisors reporting that at least half of their clientele is made up of individuals. Another 29 percent reported serving pooled vehicles exclusively.

“People have formed practices around these specialties,” says Gebauer. “The only thing that glues the investment advisor profession together is the Investment Adviser Act of 1940 – but each of the segments of the profession has grown.”

Most SEC-registered advisors are small businesses, nearly 57 percent of them employed 10 or fewer non-clerical employees, and more than 87 percent employed 50 or fewer individuals. The industry-wide median number of employees was nine.

The number of advisors providing services exclusively through an interactive website grew by 20 firms over 12 months, nearly 16 percent, to 146.

“We have advisors that are providing an impersonal type of advice, reaching large number of people, and the number of customers is increasing,” says Gebauer.  “We believe that these tend to be retail clients. We also see advisors adapting their services, rather than being just purely robo-advisors or internet-based advisors, the hybrid model where they add a personal touch interaction with the clients is emerging. We believe these internet advisors, hybrids and roboadvisors are starting to take hold.”

The number of registered private fund advisors and private funds is growing, according to the study. In 2017, 4,754 advisors reported advising 34,409 private funds with total gross asset value of $11.5 trillion, each amount a representing a significant year-over-year increase.

The researchers found that private equity funds generated most of the growth, while hedge fund growth was stagnant.

“There’s less timeline here since private funds weren’t registered with the SEC until 2011,” says Gebauer. “Private equity funds are increasing their growth rate, while the growth in hedge funds has slowed. I think it’s more of a cyclical trend that has to do with the overall economy and the prolonged expansion of the equity markets.”

The study was based on ADV, Part 1 data filed by SEC-registered advisors as of April 10, 2017.