About National Regulatory Services
National Regulatory Services provides compliance and registration products and services for financial services firms. On October 21st, 2021, National Regulatory Services was acquired by ComplySci. The terms of the transaction were not disclosed.
Latest National Regulatory Services News
Jun 26, 2023
The IAA produced its report in conjunction with National Regulatory Services, a subsidiary of the consulting company COMPLY. Most of the data analyzed was found by combing through the Form ADV documents registered firms are required to file every year with the Securities and Exchange Commission. Among the snapshot's other findings: The advisory industry continues to be dominated by small firms — 91.7% of all advisories had 100 or fewer employees. And the majority of firms tended to have relatively small amounts of assets under management. Roughly 70% of the total had less than $1 billion under management in 2022 and 88.5% had less than $5 billion. Read on for more insights from the IAA's latest industry snapshot: leremy/stock.adobe.com Joining the club Advisory numbers not only reached a record high of 15,144 last year, they've steadily been on the rise for the past five years. The industry had only 12,993 firms in 2018, meaning the industry has grown by 16.5% to get to where it is today. With more firms has also come an influx of employees. Nearly 971,500 people worked for advisory firms in 2022, a figure up about 16% from the 835,124 who did in 2018. Kate McBride, the founder and president of consulting firm FiduciaryPath, said the figures are good news for institutions who are looking for financial advisors who adhere to fiduciary principles, meaning they're under an obligation to put their clients' interests first. FiduciaryPath works with nonprofit groups, retirement plan managers, government pension departments and similar entities on their investment strategies. "This means that intermediaries who want to go RIA have more opportunities to do so, and investors have more opportunities to find a fiduciary," McBride said. Continuing the industry's dominance by small firms, almost all of the newcomers to the industry in 2022 had less than $1 billion in assets. For the industry as whole, firms on average had nine employees, two offices and $330 million in assets under management. iamchamp/stock.adobe.com As go the markets… The S&P U.S. Treasury Bond Index finished last year down 10.7% and the S&P 500 Stock Index nearly 20%. Firms saw their assets under management decline from $128.4 trillion to $114.1 trillion, a roughly 12% drop. Mark Elzweig, the president of the advisory consulting firm Mark Elzweig Company, said the figures shouldn't necessarily be taken as bad news in the industry. It's when markets are bad that investors are most likely to turn to professionals for help with placing their money. "Challenging markets have bolstered the need for solid financial advice," Elzweig said. "It's not surprising then that the ranks of advisors and people working in the advisory business have increased." Onchira/stock.adobe.com Where did all the clients go? The IAA makes an important distinction when talking about the decline in client numbers seen in 2022. The number of people and institutions who turned to financial advisors for help with asset management actually rose last year to a record high of 54.3 million, showing an increase of 2.1% It's only when that figure was coupled with the number of clients who sought services other than asset management — such as help building model portfolios — that there was a decrease. The total for these non-asset management clients fell from 11.7 million to 7.6 million. The IAA's report states that "this decline is attributable to a sharp drop in the number of non-asset management clients at a single digital advice platform," which a spokesperson for the group later identified as the financial services firm Stash. The report states: "This firm was the adviser for over one-third of the industry's clients in this category in 2021, and the decrease resulted from a change in the criteria for including accounts in this category." A footnote on the same page adds that the previous year's figures were inflated by "multiple apparent instances of over-reporting" of clients seeking advice with model portfolios. "Advisers are often unclear about the model portfolio clients to include in this category," concluded the footnote. Attempts to reach Stash were unsuccessful Monday. So this "bad news" for the industry is really no more than a technical blip. "Over the past five years, over 22 million more individuals have engaged an investment adviser for asset management – a rate of growth in both the number of individual clients and assets of roughly 12% per year," Barr said in a statement. Making it pay It's hardly a surprise that advisors bound by a fiduciary duty to avoid conflicts of interest almost never rely on commissions or similar transactional charges to make money. Fees — usually charged as a percentage of a client's assets under management — are far more common in the advisory industry. The IAA's report finds that a full 95.2% of firms charge some type of assets under management, or AUM, fee. But only 20.8% of advisors rely solely on AUM. The vast majority — more than 85% of the total — charge either a fixed annual fee or fees charged for each hour worked on behalf of a given client. Roughly 36% of advisors charge fees that depend on the performance of advisors' investment recommendations. As for the firms that don't charge AUM fees, they're most likely to be digital advice companies that work on a subscription model, according to the report. Vadim Pastuh - stock.adobe.com
National Regulatory Services Frequently Asked Questions (FAQ)
When was National Regulatory Services founded?
National Regulatory Services was founded in 1984.
Where is National Regulatory Services's headquarters?
National Regulatory Services's headquarters is located at 1007 Church St, Evanston.
What is National Regulatory Services's latest funding round?
National Regulatory Services's latest funding round is Acquired.
Who are the investors of National Regulatory Services?
Investors of National Regulatory Services include ComplySci.