Though the number of registered mutual funds is declining for the first time in nearly two decades, competition in the money management industry has not abated.

The number of registered investment advisors jumped by more than 14 percent to 7,581 in May 2002 from 6,649 in May 2001, according to data collection by the Investment Counsel Association of America and Thomson's National Regulatory Service.

Despite the bear market, this group also managed to build its asset base by $1.8 trillion to $22.1 trillion. The agencies collecting the data speculate that the boom in the business is a response to a loss in faith in stock brokers among investors.

While not all registered investment advisors have dreams of opening a fund, it is the ranks of these firms that have acted as the minor leagues for the industry.

The health of their business suggest that there will be no shortage of advisors looking into either manufacturing their own funds or subadvising the funds of others in the future. That, in turn, suggests that established manufacturers will not benefit from the current shakeout.

Distributors, on the other hand, may continue to gain the upperhand as their ranks consolidate, while the ranks of manufacturers swell.  

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