“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.