After a year of double-digit asset and revenue growth, RIAs are feeling pretty good about things – and even better about the year ahead, according to a new survey.
According to the TD Ameritrade Institutional RIA Sentiment Survey, 70% had assets grow on average by 17%, while 60% saw revenues increase by 16%, on average. Similarly, more than half (56%) of advisors say new client growth averaged 17%.
As for planned strategies to attract younger clients, a full third (33%) cited managing 401(k) plans, just behind 37% who were looking to change networking/marketing. Just under 3 in 10 (29%) were planning to hire younger advisors, while about a quarter (26%) weren’t currently working on a strategy.
Boosting Retirement Business
And, with the economy seen as having has the biggest impact on growth (27%), four out of five advisors predict their firms’ assets will grow further in 2017, and half of these advisors predict firm assets will grow even more than last year. That might explain why managing firm growth was the second-most cited impact (25%), though regulation – cited by 20% for 2017, compared with just 11% last year as a factor – also looms large. Even though the vast majority (83%) said it was “business as usual” in terms of fiduciary rule impact on their business. Of course, about a third each said it has resulted in higher legal/compliance – and just as many (31%) said they were expanding their retirement business.
RIAs also continued to attract clients from other financial services channels, though nearly a third of new clients came from full-commission brokers – the largest source. Self-directed investors were the second-largest source of new clients moving to independent RIAs in 2016.
Marketing Moves
Looking ahead, advisors expect their biggest operational spending increases to be in:
27% - marketing
19% - technology
16% - hiring/HR
14% - legal compliance
12% - client relations
In 2017 marketing/advertising (cited by 60%) looks to be the top new business strategy, with adding expertise (45%, up from 28% in 2016), and adding new niche clients (44%, down from 53%) rounding out the top three.
As for technology investments, performance reporting (18%) leads a crowded field of priorities, which also includes:
16% - financial planning
14% - CRM tools
14% - client-facing tools
11% - rebalancing
10% - cybersecurity
In 2016, advisors had their biggest increases in spending in technology, followed by legal and compliance. Conversely, most firms report that hiring/human resources and real estate-related expenditures were down from 2015.
Other Issues
- 82% have minimal – if any – concerns over robo-advisors as a competitive threat. RIAs say robos cater to a different market and their own growth has largely not been impacted by them.
- 57% have business continuity plans finalized.
- 31% have business continuity plans in the works.
- Eight in 10 are aware of the Securities and Exchange Commission’s proposed Rule 206(4)-4 requiring business continuity plans.
The results of TD Ameritrade Institutional 2017 RIA Sentiment Survey are based on a phone survey conducted by MaritzCX on behalf of TD Ameritrade Institutional, a division of TD Ameritrade Inc., of 306 RIAs between Nov. 14 and Dec. 5, 2016. The margin of error in this survey is ±5.6%.
