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Key Insights from the SEC’s Investment Adviser Statistics Report (May 2024)

The Securities and Exchange Commission (SEC) released its latest Investment Adviser Statistics Report on May 15, 2024, providing a comprehensive view of the registered investment advisers (RIAs) industry for the period ending December 2023. This report presents key data related to regulatory assets under management (RAUM), client demographics, and the growth of the advisory industry. Below are some of the key takeaways from this extensive report.

Who is an Investment Adviser?

1. Number of Registered Investment Advisers

The total number of SEC-registered investment advisers continued to rise, reaching 15,441 as of December 2023. This includes large advisory firms, pension consultants, internet advisers, and newly formed advisers. Notably, the number of large advisory firms has grown significantly, reflecting the overall expansion of the advisory sector.

2. Regulatory Assets Under Management (RAUM)

  • The aggregate RAUM for registered advisers increased to $128.8 trillion by the end of 2023, a significant jump from $115.4 trillion in 2022.
  • Discretionary RAUM accounted for $117.8 trillion, while non-discretionary RAUM stood at $11.1 trillion, showcasing the dominance of discretionary management.
  • Large advisers, particularly those managing $100 billion or more, accounted for the largest proportion of total RAUM, continuing a trend of concentration among the largest players in the industry.

3. Growth in Private Funds

The private fund industry, driven by hedge funds and private equity funds, remains a critical segment for investment advisers. As of December 2023, the total gross assets in private funds advised by RIAs and Exempt Reporting Advisers (ERAs) reached $27.9 trillion, up from $25.1 trillion in the previous year. Hedge funds accounted for $11.6 trillion of these assets, highlighting their continued importance in the financial markets.

4. Client and Account Demographics

  • High-net-worth individuals (HNWIs) continued to form a substantial portion of the client base for investment advisers. The number of advisers serving HNWIs grew to 9,308, reflecting the ongoing demand for personalized wealth management services.
  • Non-high-net-worth individuals also saw growth, with the number of clients reaching 46.5 million, indicating an increasing trend of retail investors seeking professional advisory services.

5. Separately Managed Accounts (SMAs)

Separately Managed Accounts (SMAs) remain a vital service offered by RIAs. As of December 2023, the total RAUM for SMAs reached $49.3 trillion, with equity securities, investment company shares, and U.S. government bonds being the dominant asset classes. These figures demonstrate the importance of SMAs for both institutional and individual investors seeking customized portfolio management.

Conclusion

The SEC’s Investment Adviser Statistics Report highlights the continued growth and evolution of the RIA industry, with significant increases in both RAUM and the number of registered advisers. The expansion of private funds, alongside the growing importance of HNWIs and retail clients, underscores the dynamic nature of the advisory sector. As SEC’s scrutiny intensifies and the industry expands, investment advisers must stay vigilant in adapting to changing market conditions and regulatory requirements.

About Michael Rasmussen

Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.  

Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include: 

  • Investment Adviser Compliance Essential for Chief Compliance Officers 
  • Foundations of Investment Adviser Compliance 
  • What is a “Security”? 
  • Investment Adviser Marketing Rule 
  • Regulation A – Exemption from Registration 
  • Regulation Crowdfunding – Exemption from Registration 
  • Regulation D – Exemption from Registration 

Michael can also be found on LinkedIn.

Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.