Large RIAs Fuel 20 Percent Rise in 2017

Last year’s 20 percent jump in registered investment advisors was fueled by large advisories with more than $300 million in assets under management, a new survey found.

The number of new Securities and Exchange Commission-registered advisors rose to 238 last year over 2016, the Schwab Advisor Services survey found.

The increase is a sign that the independent channel remains an attractive place for large advisors to grow, said Jonathan Beatty, senior vice president of sales and relationship management with Schwab Advisor Services.

In 2017, RIAs with more than $300 million in assets under management represented 29 percent of new RIA filings, more than double the percentage of new filings five years ago, the survey found.

Since 2013, new annual RIA filings have grown by 60 percent, from 150 RIAs in 2013 to 238 last year. The 238 new firms manage about $84 billion in assets.

Among the 2017 filings compared to 2013:

*5 percent were for RIAs with assets of more than $1 billion, compared to 4 percent.

*8 percent were for RIAs with assets of between $500 million and $1 billion, compared to 2 percent.

*15 percent were for RIAs with assets of $300 million to $500 million, compared to 6 percent.

*71 percent were for RIAs with assets of $100 million to $300 million, compared to 88 percent.

“We are seeing more large teams who feel as if they have outgrown their current model,” Beatty said in an email.

Larger advisories looking provide more personal service that mirrors the needs of clients look to the independent channel, he said.

Better technology systems, more flexibility to determine compensation structures, the freedom to develop a unique brand, the advent of fee-based products, the availability of capital for future growth and opportunities to develop different business models have drawn many advisors away from national broker-dealers, according to industry analysts.

Investors have also had a say.

“Investors have a growing understanding of what it means to have a fiduciary providing them with advice – and they want it,” Beatty said.

There are about 12,000 SEC-registered RIAs in the U.S., managing an estimated $2.5 trillion in assets.

Schwab is the leading custodian for newly independent advisors.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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