The RIA channel added more than $10 trillion in assets under management over the past year, according to a recently released report.
The total regulated assets under management among RIAs has grown to $82.5 trillion from $70.7 trillion in 2017, a change of almost 17 percent, according to the 2018 “Evolution Revolution” report from the Investment Advisor Association (IAA) and National Regulatory Services (NRS).
Most of those assets reside in pooled vehicles, with registered investment companies and private investment vehicles accounting for $48.9 trillion of the regulated AUM, nearly 60 percent of the total. High net worth individual accounts, accounts owned by clients with $1 million or more, accounted for $5.7 trillion or 7.3 percent of the regulated AUM.
The number of registered advisors has grown by 3.3 percent over the past year to 12,578, a new record, according to the report. The RIA channel now serves more than 34 million clients.
In 2018, the typical RIA has $359 million AUM and 9 employees, serving 124 client accounts that are held mostly by individuals – but on average also has at least one pension or profit-sharing plan as a client.
Most RIAs, more than 95 percent, still charge a fee based on a percentage of a client’s AUM, but sizable portions are charging fixed fees, 43 percent, performance-based fees, 37.4 percent, and hourly charges, 29 percent. Just 3.6 percent of the RIA channel receive some form of commission-based compensation.
The heart of the RIA segment still lies in firms with $100 million to $1 billion in regulated AUM. In 2018, 7,064 of the reporting firms fell within that asset range, 56 percent of the total. The 147 firms with more than $100 billion in regulated AUM, 1.2 percent of the RIA segment, accounted for 59.2 percent of the total RIA assets.
The largest firms are also the fastest growing. Firms with under $1 billion in registered AUM experienced a 1.6 percent increase in the number of advisors and a 6.1 percent increase in AUM, and firms with $1 billion to $100 billion AUM experienced 7.3 percent advisor growth and 4.4 percent AUM growth – while the largest firms with more than $100 billion AUM experienced 18.6 percent advisory growth and 27 percent AUM growth.
In 2018, there are a total of 805,623 non-clerical employees working at RIAs, an increase of 3.6 percent since 2017. Over half of these employees are offering investment advisory services.
Most of these employees work in a small business setting. In 2018, 56.8 percent of advisory firms reported employing 10 individuals or fewer in non-clerical roles, and 87.5 percent reported employing 50 or fewer individuals. The largest 108 firms employ 52.5 percent of the non-clerical employees in the RIA channel.