Regulation and Compliance Federal Regulation SEC

Number of RIAs Jumps Slightly Despite Registration Switch

October 03, 2013 at 10:03 AM
Share & Print

The total number of advisors registered with the Securities and Exchange Commission managed to tick up slightly from 10,511 last July to 10,533 as of April despite the fact that 2,000 federally registered advisors completed their switch to state registration, according to the Investment Adviser Association and National Regulatory Services just-released Evolution/Revolution report.

The 2,000 SEC registered advisors with from $25 million to $100 million AUM who switched to state registration under the Dodd-Frank Act were replaced by 1,500 "private fund advisors" under the Investment Advisers Act who became newly registered investment advisory firms with the Commission, according to the 13th annual report.

While the latest total is a significant drop from 11,539 who were SEC-registered in 2011, SEC-registered investment advisors in 2013 reported $54.8 trillion in aggregate regulatory assets under management, a substantial increase of 10.9% from $49.4 trillion in 2012.

"Our report underscores the fact that the Dodd-Frank Act has had a profound effect on the composition of the investment advisory profession," said David Tittsworth, executive director of the IAA, in a statement. "The law has shifted regulatory responsibility for hundreds of smaller firms to the states, while requiring larger private fund advisors to register with the SEC. These dramatic shifts have yielded a net decrease in the number of SEC-registered investment advisory firms. However, many of the core characteristics of the advisory profession remain fairly constant."

Other key findings from the report, which are based on information on file with the SEC as of April 12, include:

  • SEC-registered investment advisors in 2013 reported $54.8 trillion in aggregate regulatory assets under management (RAUM), a substantial increase of 10.9% from $49.4 trillion in 2012. This increase is particularly notable given that the number of SEC-registered investment advisers has not changed significantly. This increase in RAUM managed by advisors may be attributable to both rising markets and organic growth in the industry, evidenced by the increase in the number of clients served.
  • More than one-third of all SEC-registered advisors (38.1%) reported that they manage at least one private fund. Private fund advisors reported a total of 26,752 private funds with collective RAUM of $8.5 trillion – up from $8.1 trillion in July 2012.
  • Hedge funds comprise 40.8% of all reported private funds while private equity funds comprise approximately 32.5%.
  • 4,530 SEC-registered investment advisors (43%) reported that they or a related person are deemed to have custody of client assets.
  • Less than 1% of advisors (99) reported acting as a qualified custodian (that is, having actual physical custody) in connection with their advisory services.

—

SEC
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Related Stories

Quarter of SEC Actions Dealt With Off-Channel Communications in 2024: Report SEC Chair Gensler to Step Down GOP Senator Calls for Rulemaking Halt Until Trump Takes Office Gensler Makes Final Pitch on SEC Crypto Rules Who Might Succeed Gensler as SEC Chair Invesco to Pay $17.5M Over Misleading Statements

Resource Center

Can Systematic Risk Be Reduced? link

Guide

Can Systematic Risk Be Reduced?

The Business Model Playbook: Mastering Technology for Firm Success link

Playbook

The Business Model Playbook: Mastering Technology for Firm Success

Harnessing AI to Power Advisor-Client Relationships link

White Paper

Harnessing AI to Power Advisor-Client Relationships