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Bureau of Labor Statistics > Producer Price Indexes > Methods > Industry Factsheets

Producer Price Index for Portfolio Management and Investment Advice - NAICS 523940

Producer Price Index (PPI) updates to the 2022 North American Industry Classification System (NAICS) definitions were implemented with the release of PPI data for January 2023. Prior to the update, Portfolio management (NAICS 523920) and Investment advice (NAICS 523930) were separate industries. With this update, they been combined into Portfolio Management and Investment Advice ‐ NAICS 523940. While NAICS 523940 is a newly introduced industry-level index with a base date of December 2022, the lower level Portfolio Management and Investment Advice indexes remain continuous, with historical data to June 2002. These indexes appear in Table 11 of the monthly PPI Detailed Report, and are available online through the BLS website.

According to the 2022 NAICS definition, this industry comprises establishments primarily engaged in managing the portfolio assets (i.e., funds) of others on a fee or commission basis and/or providing customized investment advice to clients on a fee basis. Establishments providing portfolio management have the authority to make investment decisions and they derive fees based on the size and/or overall performance of the portfolio. Establishments providing investment advice provide financial planning advice and investment counseling to meet the goals and needs of specific clients, but do not have the authority to execute trades.

The Portfolio management and investment advice activities for which price indexes are available include:

The primary output of Mutual fund and exchange traded fund management is investment advice and investment management through diversification and risk minimization. Mutual funds are owned by shareholders that elect a board of directors to oversee operations and determine a fund's investment goals. Investment advisors are paid by mutual funds to select and manage the securities that make up a fund's portfolio, consistent with its stated investment objective. Within this stated objective, the board of directors pays the mutual fund manager to keep the funds assets maximized. Price movements for this index are based on changes in the amount of revenue a mutual fund manager receives for providing investment advice. To track price movement for the index, data on management fees are collected. The management fee is most often based on a percentage of assets under management or a certain number of basis points (FEE = BP*FV, where FEE is the management fee, BP is basis points, and FV is fund value). The basis points charged by mutual fund management firms tend to be list prices that are fully published in prospectus documents. A basis point is equal to 1/100th of a percent, or 0.0001. A mutual fund's assets are held fixed from the beginning of the reporting period, not allowing any inflows or outflows, and are updated by the rate of return on a monthly or quarterly basis.

Like Mutual fund management, the primary output of Private portfolio management is investment advice and investment management through diversification and risk minimization. Unlike mutual funds, portfolios are normally tailored to a specific person or an organization. Some examples of portfolios are corporate retirement funds, foundations, and trusts. The portfolio manager selects securities to maximize the assets in the portfolio within the agreed-upon investors' investment objectives. Outputs measured in this index include fees earned by financial advisors managing portfolios created by portfolio managers and commodity trading advisors, and fees for reports concerning securities prepared by investment researchers and portfolio analysts. Price movements for this index are based on changes in the amount of revenue a portfolio manager receives for providing investment advice. To track price movement for the index, data on management fees are collected. The management fee is calculated using the formula stated above for mutual fund management. A portfolio's assets are held fixed from the beginning of the reporting period, not allowing any inflows or outflows, and are updated by the rate of return on a monthly or quarterly basis.

The primary output of Investment advice is the provision of investment advisory services, including financial planning and portfolio analysis services, on a fee basis. An investment adviser helps a client to: Clarify present situations by collecting and assessing all relevant personal and financial data; decide where the client wants to be by identifying both financial and personal goals and objectives; identify financial problems that can create barriers to the client's financial independence; and write, implement, and constantly review a financial plan. Transactions that are measured in this index include fees paid to financial planners for creating financial plans, hourly fees for financial advice given by financial advisors, fees for reports concerning securities prepared by investment researchers and portfolio analysts, and fees based on a percentage of assets under management for investment advisory services. In the case of financial planning, investment research, and portfolio analysis, the unit of measure for a financial plan and a securities report is a fee that can be determined from the number of hours spent on a document, the length of a document, the complexity of a document, or a flat rate. For investment advisory services based on assets undermanagement, the management fee is calculated using the formula stated above for mutual fund management and the assets are held fixed from the beginning of the reporting period, not allowing any inflows or outflows, and are updated by the rate of return on a monthly or quarterly basis.

Last Modified Date: March 20, 2023