New TD Ameritrade Institutional Advisor Index Study finds regulatory
issues top list of concerns, while client referrals and technology offer
best growth opportunities
JERSEY CITY, N.J.--(BUSINESS WIRE)--
Independent registered investment advisors (“RIAs”), buoyed by strong
market and client growth last year, say it’s full steam ahead for their
businesses and the economy in 2014, according to new findings from the
latest TD Ameritrade Institutional Advisor Index Survey.
After a year of robust market growth, independent advisors are feeling
good. RIAs report revenues were up roughly 20 percent at the end of
2013, and assets under management averaged 20 percent growth as well.
More than two thirds of advisors said their client base increased by an
average of 13 percent.
They are also more optimistic about the U.S. economy than they have been
in five years, fueling confidence about their own businesses. Bolstered
by referral networks and technology investments, three-fourths of RIAs
predict firm assets under management will grow at least as fast as 2013,
with 30 percent expecting growth at a 31 percent faster clip, on average.
“After another year of double-digit growth on all fronts, advisors have
renewed energy and enthusiasm about their prospects,” said
president of TD Ameritrade Institutional. “They’re building on last
year’s momentum and serving clients better by making strategic
investments in their people and their technology.”
Just over half of new client assets came to RIAs from full-commission
brokerage firms in 2013. More personalized service and competitive
fee-structure is the number one reason clients chose to move to an
independent RIA, according to survey respondents.
Heading into 2014, 38 percent of RIAs expect the stock market to
continue its upward trajectory and 46 percent say it will remain the
same. But advisors are less enthused about the historically low-yielding
bond market. More than half say the bond market should stay the course
over the next three months, though 41 percent believe bond prices will
start to fall in a period when interest rates are widely expected to
RIAs anticipate the total rate of return on client investments will
average eight percent for the first half of 2014. And they are making
slight adjustments to client portfolios to achieve this, moving toward
equities at the expense of fixed income. Equities are now 54 percent of
client portfolios, compared with 48 percent last year, while
fixed-income allocations now average 23 percent of client portfolios,
down from 27 percent from last year.
Moreover, 42 percent of advisors are searching outside of the bond
market for higher yields, investing in asset classes such as
international stocks, real estate and energy. Seventy percent of RIAs
continue to use exchange-traded funds (ETFs), and 40 percent will
increase their usage of these low-cost vehicles over the next 12 months.
Advisors Facing Regulatory Issues
Advisors report their top business concerns are regulatory changes, firm
profitability and growth. A full 71 percent of RIAs claim that the
potential burdens and costs they will have to manage as a result of the
changing regulatory landscape are the biggest competitive threat,
followed by growing numbers of investors opting for do-it-yourself
investing (33 percent) and broker-dealers offering fee-based investment
management services (32 percent).
Coping with regulatory change is not simply a business concern for RIAs,
it’s potentially one of the biggest obstacles to firm growth in 2014. As
in 2013, advisors also feel challenged by handling increased compliance
requirements and dealing with an aging client base.
“The biggest hurdles to advisor growth don’t disappear overnight –
addressing increased compliance requirements, regulatory changes and an
aging client base takes time to work through successfully,” said Nally.
Gearing Up For Growth
RIAs are moving forward with firm-wide strategic initiatives that were
in place in 2013. They remain committed to utilizing technology to
increase scale, systematizing client service and delivery, and training
and developing staff. Implementing these plans will require some
infrastructure upgrades, so 66 percent are committing more capital to
technology and more than a quarter plan to hire junior advisors to
accommodate growth. Augmenting compliance (23 percent) rounds out the
top projects this year on advisors’ to-do lists.
The technology upgrades being considered most by advisors are related to:
Customer relationship management (CRM)
Reaching New Clients
RIAs are putting more muscle behind their marketing in 2014. Forty
percent will increase spending on marketing and business development in
the first half of the year, while 58 percent will maintain their current
budget. Efforts will likely be centered on increasing referrals from
clients and so-called centers of influence, such as attorneys and
accountants, which advisors indicate are the top two tactics that drive
With clients averaging 55 years of age or older, RIAs recognize that
growth will come from the next generation of investors. But most are
struggling with the right marketing approach and are seeking turnkey
solutions to help them do so. Fifty six percent are open to a program to
help hire interns. Roughly 60 percent say they would like their own
online financial advice service to existing clients, and 65 percent are
open to having this type of offering to help attract new clients.
“RIAs continue to be fastest growing wealth management channel, and we
want to make sure they have the right tools to maximize every
opportunity to grow in every market cycle,“ said Nally. “We’re listening
to advisors and helping them in all the areas where they need and want
For more information about the TD Ameritrade Institutional Advisor Index
Survey, visit http://www.amtd.com/files/doc_news/research/AdvisorIndex_survey_Q22014.pdf to download the complete survey findings.
The results of TD Ameritrade Institutional Advisor Index Survey are
based on a survey conducted by Maritz, Inc. on behalf of TD Ameritrade
Institutional, a division of TD Ameritrade, Inc. Three-hundred and two
registered investment advisors (“RIAs”) with firm assets under
management averaging $191 million participated in a telephone survey
from January 6 – January 17, 2014. Independent RIAs who custody with TD
Ameritrade Institutional, as well as other independent RIAs from across
the country were asked to share their views on the economic outlook for
their firms and the advisor market in general. The margin of error in
this survey is ±5.6%. This means that in just over one case out of 20,
survey results based on 302 respondents will differ by no more than 5.6
percentage points in either direction from what would have been obtained
by seeking the opinions of all eligible RIAs. Maritz, Inc. and TD
Ameritrade, Inc. are separate, unaffiliated companies and are not
responsible for each other's products and services.
St. Louis-based Maritz is a sales and marketing services company, which
helps companies achieve their full potential through understanding,
enabling, and motivating employees, channel partners, and customers.
Maritz provides market and customer research, communications, learning
solutions, incentive initiatives, rewards and recognition, effective
meeting, event and incentive travel management services, and customer
loyalty programs. For more information, visit www.maritz.com
or contact us at 1-877-4MARITZ.
TD Ameritrade and Orion Advisor Services, LLC are separate and
unaffiliated companies, and are not responsible for each other’s
policies or services.
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