The oldest RIAs are 85. How did they become a $144T industry?

Core Insights - The growth of the Registered Investment Advisor (RIA) model is attributed more to consumer preference for helpful advice rather than the fiduciary obligation itself [1] - The evolution of technology has enabled RIAs to offer investment advice at a mass scale, contributing to the industry's growth [2] - The current landscape shows a significant increase in RIAs, with 15,870 firms managing $144.6 trillion in assets, compared to 436 companies with $2 billion in assets in 1940 [3] Industry Development - The RIA industry has expanded significantly since the introduction of the Investment Company Act of 1940 and the Investment Advisers Act, which established fiduciary duties [3][24] - The number of RIAs has grown from 436 in 1940 to 15,870 today, with a substantial increase in assets under management from $2 billion to $144.6 trillion [3] - The oldest RIA, Howe & Rusling Wealth Management, has maintained its independent status since its registration in 1941, focusing on retail wealth management [4][22] Regulatory Environment - The debate over the implementation of fiduciary laws continues, with recent developments applying fiduciary duty to more types of investment advice [9][12] - The SEC's Regulation Best Interest, which replaced the suitability standard in 2020, governs brokerages but is less stringent than the fiduciary duty established in the '40 Act [11] - The need for uniform fiduciary rules with tougher consumer protections is emphasized, as current regulations allow for potential conflicts of interest [10][12] Technological Impact - The rise of personal computers and digital brokerages in the 1990s provided RIAs with the necessary technology to manage a larger client base effectively [5][30] - The introduction of custodial platforms by firms like Charles Schwab and Fidelity Investments has facilitated scalable operations for RIAs, leading to significant industry growth [30] Historical Context - The fiduciary principles established in the 1940 laws were a response to the market crash of 1929 and aimed to restore trust in the investment advisory industry [24][28] - The SEC's enforcement of fiduciary duty has been crucial in addressing problematic practices within the industry, ensuring that advisors disclose conflicts of interest [25][29] - The historical context of fiduciary laws reflects a long-standing debate over the balance between regulatory oversight and the freedom of financial advisors [32][34]