Financial advisors gathered for discussions on the future of their industry at DeVoe & Company’s fourth annual Elevate conference in Nashville, according to InvestmentNews.
In his keynote presentation to open the conference, DeVoe & Company’s Chief Executive David DeVoe addressed the growth of registered investment advisory firms and the challenges still ahead of them.
He noted that statistics measuring the success of RIAs do not tell the entire story. For example, DeVoe said the 2017 growth rate for RIAs averaged 23% but 13% of that increase was due to market returns and another 1% came from mergers and acquisitions. As a result, 9% was the actual rate of organic growth in the industry.
In the ensuing years the rate of organic growth dropped further to 7% in 2018, 4% in 2019 and 3% in 2020 before rising slightly again last year to 4%.
“This industry should be growing faster than 3% or 4%,” DeVoe said, adding that the strong market performance may have instilled a sense of complacency and distracted RIAs from taking the necessary steps to grow their business organically.
To further illustrate the point, he noted that investments in business development by advisory firms have been reduced by 50% since 2017, and that the average organic growth rates across the RIA space have decreased by about the same amount.
DeVoe encouraged those in attendance to try to increase their growth through a sustainable, comprehensive and integrated business development strategy. He added that the slow pace of growth has also led to a decline in the number of mergers and acquisitions among RIAs following record highs over the past decade.
With the changes in the securities industry, RIAs are becoming more popular. However, RIAs are strictly regulated not only by the SEC, but also by state securities regulators. At Lewitas Hyman, our attorneys have helped RIA clients better understand the constantly shifting regulatory landscape impacting RIA regulatory compliance. For more information about the services we provide to RIAs, please contact Lewitas Hyman at (888) 655-6002 or through our online contact form.