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How many RIAs are there? No, seriously, how many?

Competing counts are full of 'bastardized' definitions of 'advisor,' state vs. SEC- vs. dually registered IARs, differing study criteria and agendas

Author Kelly O'Mara November 11, 2015 at 7:57 PM
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A plethora of definitions and categories must be sorted and so must manipulation of the count.

RIA Compliance

Jeff McClure

Jeff McClure

November 11, 2015 — 11:11 PM

The provision of investment advice is pretty clearly not a profession like that of physicians, attorneys, or engineers. In fact, it may not rise to the level of being a “trade.” One can find the exact number of plumbers in the United States as it requires a specific license. Plumbers are not plumbing supply salespersons. The same is generally true of the other trades.

There are clearly a set of investment advisers who are in the business of offering investment advice and management, but there are many, many more who are in the product sales business and use the IA registration as a revenue enhancer and front. As your article states, there is a great deal of bastardization of the term “advisor” no matter how one spells it.

I really wish there was an organization with the kind of discipline and authority held by the state bar associations, or medical boards. That would mean true self-regulatory organizations in each state with authority under the law to license and discipline.

Stephen Winks

Stephen Winks

November 11, 2015 — 11:36 PM

If we use the statutory definition of advice and advisors, the number of advisors is quite small yet with the DOL Fiduciary definition, this number will grow quite large as broker/dealers are required to support advisory services in ways not evident today. There are technologies here and in Europe which are driven off of investment policy that are electronically geared to high level individualized portfolio construction and the ongoing monitoring (in a fiduciary capacity) of an unlimited number of individualized accounts. With scale these technologies the authenticated expert systems just add a few basis points in cost yet are totally transparent in terms of cost, performance and risk. Because this technology literally changes the role of the broker, the head count od advisors will exponentially grow. Who in fact will want to be a broker? Thus, this inflection point streamlines cost, greatly enhances the counsel of advisors and enables all advisors to achieve professional standing in advisory services. This is a material departure from commission brokerage, it democratizes intellectual capital required by statute. It lessens the industry’s cultural push back to advisory services and restores the trust and confidence of the investing public. It will also be the catalyst for much needed regulatory reform in the consumer’s and advisor’s best interest. The reticence of b/ds and regulators to support advisory services is rendered moot in a free market that values the consumer’s best interest..

Stephen Winks.

Thomas Kennett

Thomas Kennett

February 19, 2017 — 3:40 AM
Anyone who holds a FINRA 65 or 66 is the regulatory RIA definition. Many other forms of investment adviser exist, including lawyers, CPAs, wealth managers, trust officers, family officers, investment consultants, <a href="http://et.al" rel="nofollow">et.al</a>. But only those properly registered 65 or 66 are legally allowed to specifically and publicly hold themselves out and offer ongoing investment supervisory services. I've been in the investment industry for over 40 years. Professionals cross role lines all the time. Stick to what is clearly definable, which likely is a small number near 10000-20000, but assume the total, gross number is in the hundreds of thousands.
Stephen Winks

Stephen Winks

February 20, 2017 — 6:30 PM
Thomas Kennett, Series 65/66 is just a registration and does not determine professional standing as evident by the number of brokers who hold 65/66. SCW
Thomas Kennett

Thomas Kennett

February 21, 2017 — 1:45 AM
Stephen, using the formal registration data is the best way to quantify RIA count. That a BD or other entity also houses 65/66 registrants is unimportant, inasmuch as those registrants may legally advise, and that's the head count we're trying to ascertain.
Stephen Winks

Stephen Winks

February 21, 2017 — 2:44 PM
Thomas, In a court of law b/ds will not acknowledge brokers render advice, thus 65/66 registration is irrelevant as it is not enforceable. SCW
Thomas Kennett

Thomas Kennett

February 22, 2017 — 2:01 AM
Stephen, you clearly are unfamiliar with securities law and the relative forensics, as well as with the practicality of uncovering the number of RIAs, which was the original topic of this blog. I'll disengage and leave you to pursue other conversations. Best.
Stephen Winks

Stephen Winks

February 22, 2017 — 3:09 PM
Thomas, Identifying RIAs by 65/66 registration establishes in principle who is acting as an advisory capacity, but to determine those who are actually in fact acting in fiduciary capacity can not be determined by registration. B/ds as a matter of practice do not acknowledge their brokers render advice (creating fiduciary liability), As a consequence we have 40% of investor earnings on retirement savings being lost to brokerage fees, commissions and administrative cost--a clear violation of fiduciary duty counter to the client's best interest. Thus the importance of the DOL fiduciary ruling. I am not an attorney but am 100% sure of the industry's defense in avoiding ongoing fiduciary responsibilities of its brokers making recommendations. They simply say, no advice was implied or rendered. It is the investors sole responsibility to determine investment merit on their own, regardless of how limited their investment knowledge and experience may be. The broker simply makes the investor aware of their investment alternatives, thus no investment advice is rendered. This "legal distinction" is what the industry hangs it hat on in avoiding fiduciary liability. From the perspective of a consumer, the absence of ongoing responsibility for recommendations is why there is a loss of trust and confidence of the investing public. SCW

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