Fee revenue at investment advisory firms jumps 84% as more investors turn to professionals

A buoyant stock market and expanding liquidity are drawing more investors to hand their assets to professionals. Fee revenue at investment advisory and discretionary asset management firms jumped nearly 84% in a single year, surpassing 2.25 trillion won ($1.59 billion), with net profit at dedicated advisory firms surging 1,802.8% from a year earlier as the equity market boom fed directly into earnings.

According to the Financial Supervisory Service's "2025 Business Year Investment Advisory and Discretionary Management Operating Results" released Thursday, fee revenue at investment advisory and discretionary firms totaled 2.25 trillion won in the 12 months through March, up 1.03 trillion won, or 83.8%, from the previous year. Of that, firms that operate advisory and discretionary services alongside other financial businesses — including asset managers, brokerages and banks — earned 1.8 trillion won in fees, while dedicated advisory and discretionary firms brought in 445.5 billion won.

Investment advisory firms help clients make investment decisions, while discretionary management firms take full or partial control of a client's assets and manage them directly. As of end-March, 376 multi-service firms and 454 dedicated firms were operating in the sector, bringing the total to 830 companies — up 26 and 11, respectively, from a year earlier.

The overall size of contracts under management also expanded rapidly. Total contracts across all advisory and discretionary firms stood at 857.1 trillion won as of end-March, up 114.2 trillion won, or 15.4%, from 742.9 trillion won a year earlier. Advisory contracts grew 13.3 trillion won, or 41.3%, to 45.5 trillion won from 32.2 trillion won, while discretionary contracts rose 100.9 trillion won, or 14.2%, to 811.6 trillion won from 710.7 trillion won.

Multi-service firms, which account for the bulk of total contracts, held 814.8 trillion won in contracts, up 93.2 trillion won, or 12.9%, from a year earlier. Asset management companies accounted for 711.5 trillion won, mostly from discretionary contracts with insurers and pension funds. Brokerages recorded 100.8 trillion won in contracts, driven primarily by individual and corporate clients.

Fee revenue at multi-service firms rose 791.5 billion won, or 78.1%, to 1.8 trillion won from a year earlier. Discretionary management fees made up the largest share at 1.62 trillion won, or 89.9% of the total. By sector, asset management companies led with about 1.1 trillion won, accounting for 60 percent of the total, followed by brokerages at 715.3 billion won, or 39.6 percent, and banks at 7 billion won, or 0.4 percent.

Dedicated advisory and discretionary firms posted even sharper growth. Their total contracts reached 42.3 trillion won as of end-March, nearly double the 21.3 trillion won recorded a year earlier — an increase of 21 trillion won, or 98.6%. Discretionary contracts surged 206.6 percent to 23.3 trillion won from 7.6 trillion won, while advisory contracts rose 38.7 percent to 19 trillion won from 13.7 trillion won.

Earnings improved sharply as well. Net profit for the period at dedicated advisory and discretionary firms totaled 412.9 billion won in the 12 months through March, a jump of 391.2 billion won, or 1,802.8%, from 21.7 billion won a year earlier. Fee revenue more than doubled to 445.5 billion won from 210.8 billion won, a gain of 111.3 percent, while gains from proprietary asset management surged to 340 billion won from 32.2 billion won.

The number of profitable firms also rose sharply. Of the 454 dedicated firms, 305 posted a profit, pushing the share of profitable companies to 67.2 percent from 40.2 percent the previous year — a gain of 27 percentage points. The number of loss-making firms fell by 116 to 149.

Demand from retail investors grew particularly fast. Individual investors' advisory and discretionary contracts rose from 38.5 trillion won at end-March 2024 to 41.5 trillion won at end-March last year, then to 59.2 trillion won at end-March this year. Financial regulators attributed the trend to growing demand among retail investors to have professionals manage their assets, driven by a more active stock market and greater market liquidity.

The FSS said it plans to continue monitoring risk factors in line with the sector's expansion. "We will continuously examine and monitor various risk factors, taking into account the characteristics of each sector, firm size and type of assets under management," an FSS official said. "We will also analyze the current state and risks of generative AI-based investment advisory services, as well as overseas cases, to develop supervisory measures for the investment advisory industry that protect domestic investors."