A highly credible new survey says the private wealth asset managment business remains highly concentrated, with large firms dominating market share as measure by AUM.
The advisory business is bigger than ever, but ongoing M&A is making the biggest firms grow larger still, and they now control most private wealth assets.
The number of RIAs in the U.S. declined slightly in the past 12 months for the first time since the Investment Adviser Association and National Regulatory Services started tracking this data over a decade ago.
While there are 0.8% fewer RIAS, IAA and NRS say total assets under management soared 13.7% to a record $43.8 trillion.
Fewer firms with soaring AUM among private welath frims means the average RIA has grown larger. On average, each of the 11,539 firms surveyed by NRS and IAA manage $3.8 billion.
However, in practice, the giants distort those numbers.
Accroding the IAA and NRS survey data, 565 RIAs -- less than 5% -- have captured 84% of private wealth assets. That's market share dominance.
And the giants are expanding quickly.
Meanwhile, 41% of all 11,539 firmsl manage under $100 million, and 40% of them manage $100 million to $1 billion.
These are not necessarily weak firms.
With M&A activity among RIAs going strong, concentration of assets in larger firms is a growing trend reshaping the RIA industry
The roll-up seems to have happened almost overnight and we could be witnessing a long-awaited shakeout among smaller RIAs, a time in which advisors affiliated with larger firms with enduring value capture more AUM per advisor.