At 10:30 p.m. on a Friday night this past September, I received an email from the United States Securities and Exchange Commission (the SEC). While the odd hour caught me off guard, the news within the email was what I had been hoping for and expecting.
After months of hard work and preparation, we had transitioned from being a California-registered investment advisor to an SEC-registered investment advisor. Our regulator had changed. And the email was the government’s way of communicating, “Nice job. Well done.”
In the United States, firms like ours are known as registered investment advisors, or RIAs for short. RIA firms managing less than $100 million for their clients are required to register with, and be supervised by, their state securities industry regulator. RIA firms managing more than $100 million for their clients are required to register with, and be regulated by, the SEC.
Most RIA firms never become large enough to require SEC registration, and so within the industry, there is a hint of prestige attached to being an SEC-registered advisor. According to industry researcher RIA Database, there were 14,955 RIA firms like ours in 2020. Of those firms, 10,108 managed less than $100 million for their clients. Being SEC registered places a firm roughly in the top third of the industry.
At our current size, we are larger than about 10,500 other RIA firms, and with our continuing growth are well on our way to cracking that top quartile.
As I read the email from the SEC, I reflected on the 18 years it has taken to get to this point. Ours is a story of continual growth, and it directly parallels our clients’ experience.
Our clients have continued to strengthen their personal financial situations over the years and to build and protect their wealth. They have opened themselves to an ongoing coaching relationship. Unlike many people who think they only need help with one specific financial issue—for example, “What should I do with my stock options?”—our clients have taken an intentional approach to their wealth, hiring us to guide them through their lifelong process of making good financial decisions continuously over time.
And it’s worked. They’re meeting their financial goals. Their minds are at ease about their personal finances. Their wealth is growing. And as a result, our firm is growing.
I feel sincere gratitude toward those clients who have placed their trust in us. As a business we, and I personally, strive every day to earn that trust again, over and over, building on the solid foundation we’ve created together, both operationally and interpersonally.
Unfortunately, there are a lot of people who are not doing as well financially. About half of Americans are not confident they’ll reach their financial goals before retirement, and more than half have stress or anxiety in their lives about money. With people living longer and personal finance education lacking in homes and schools, these are chronic problems in our society. I wish this weren’t the case.
I am optimistic about the future, however. Powerful new technologies are becoming available that are helping our industry reach more people cost effectively. New apps and tools are helping individuals and families better manage their personal finances. There is also growing awareness of the urgent need for more financial education in schools at all levels, from grade school through college. Our industry is growing quickly, and through its increasing influence, it’s making progress solving tough personal finance problems.
As we wrap up this year and begin planning for next year as an SEC-registered advisor, I look forward to our continued growth. With that growth and the greater resources it affords us, we can help more people resolve financial conflicts, take advantage of financial opportunities, and achieve a lifetime of security and success.
Our growth is dependent on our clients’ growth. And that’s how it should be.
Parkworth Wealth Management provides holistic wealth management services including financial planning, equity compensation planning, investment management, tax planning, and others, on a fee-only basis and as a fiduciary, acting in clients’ best interests. If you’re thinking about hiring a wealth manager and would like to understand how an ongoing relationship can help you achieve financial success and security, schedule a complimentary consultation.
