March 4, 2024



Just like a broker-dealer, In 2022, there will be an increase in the number of newcomers to the industry for investment advisory firms.

The number of U.S. trust advisory firms rose 2.2% last year to a record 15,144, According to a recent report by the Institute of Investment Advisers. Meanwhile, the professional body representing more than 600 consultancies has seen a decline in both the industry’s assets under management and the number of clients.

But in the long run, the industry is on the rise. The $114.1 trillion managed by advisors for clients likely fell from $128.4 trillion a year earlier, largely as a result of declines in stock and bond markets. But still well above the $83.7 trillion the industry managed in 2018.

The same goes for the number of customers. The number of individuals, groups and institutions advising financial advisors was 61.9 million, likely down from 64.7 million in 2021. But still well above the 43.6 million people who sought advice in 2018.

“Investors are increasingly engaging investment advisors who act as fiduciaries to provide ongoing investment management advice that puts the interests of their clients ahead of others,” IAA CEO and President Karen Barr said in a statement over self-interest.”

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The IAA prepared the report jointly with National Regulatory Services, a subsidiary of consulting firm COMPLY. Much of the analytical data was found by combing through the Form ADV filings that registered companies must file with the US Securities and Exchange Commission each year.

Other findings from the snapshot include: The consulting industry is still dominated by small firms – 91.7% of consulting firms have 100 or fewer employees.

Most companies tend to have relatively few assets under management. By 2022, approximately 70% of businesses will have less than $1 billion in assets under management, and 88.5% will have less than $5 billion in assets under management.

Read on for more insights from the latest industry snapshot from the IAA: