RIA Compliance and Practice Management Blog

NASAA Releases 2018 Investment Adviser Annual Report

Posted by RIA in a Box

May 17, 2018 6:24:48 PM

NASAA 2018 RIA Industry Report on total number of RIA firmsRecently, the North American Securities Administrators Association ("NASAA") released its 2018 Investment Adviser Annual Report which is its first ever "annual report identifying the contours of the state-registered investment adviser population and the related regulatory activities of state securities regulators." While the report highlights the previously released top registered investment adviser ("RIA") regulatory compliance deficiencies by category, it also provides a wealth of valuable data about the total number and characteristics of both state and federally-registered RIA firms. In addition, the report summarizes the work of the various NASAA project groups including cybersecurity and technology, operations, regulatory policy and review, resources and publications, and training.

State-Registered RIA Firm Industry Statistics

This new report provides a terrific overview of the current state-registered RIA landscape. As of December 31, 2017 the top 5 states for number of state-registered firms are:

  1. California: 2,998
  2. Texas: 1,279
  3. Florida: 1,099
  4. New York: 876
  5. Illinois: 778

With a reported 17,688 total state-registered firms, 16.9% of all state-registered RIAs are located in the state of California. However, the state of California did not make the list of top 5 states for increase in the total number of state-registered firms measured from December 31, 2016 to December 31, 2017:

  1. Ohio: 27
  2. Wyoming: 21
  3. Arizona: 19
  4. Texas: 17
  5. Kentucky: 12

Wyoming is a particularly interesting outlier as effective on July 31, 2017, the state of Wyoming now operates its own investment adviser registration and examination program. Previously, all RIA firms, regardless of total assets under management ("AUM") located in the state of Wyoming instead registered federally with the Securities and Exchange Commission ("SEC"). 

The NASAA report also highlights that 78% of state-registered firms are 1-2 person shops with 82% of such firms offering individual portfolio management and 63% offering financial planning services. Thus, particularly at the state registration level, the vast majority of firms continue to serve the traditional retail market.

SEC-Registered RIA Firm Industry Statistics

At the federal level, the the top 5 states for SEC-registered RIA firms are as follows:

  1. New York: 1,564
  2. California: 1,475
  3. Texas: 651
  4. Massachusetts: 535
  5. Illinois: 522

As for the states experiencing the largest increase in the total number of SEC-registered firms from December 31, 2016 to December 31, 2017, the top five were:

  1. California: 90
  2. Florida: 39 (tie)
  3. Texas: 39 (tie)
  4. Ohio: 25
  5. Washington 16

It's interesting to note that both at the state and federal registration levels, the state of Ohio is an outlier in recent growth in the total number of registered investment adviser firms.

In addition, unlike state-registered firms which are heavily composed of 1-2 person shops, each SEC-registered RIA firm has 8.55 individual investment adviser representatives on average. 

Be sure to check back soon as we continued to provide more detailed data and information on the growing RIA industry.

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RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

Topics: RIA Compliance

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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