Survey Finds RIAs Look to Marketing, Not M&As, to Drive Growth

While technology, legal and compliance matters dominated their spending in 2017, RIAs anticipate that their biggest investments in 2018 will be marketing and hiring, according to new survey results.

RIAs also say that a top strategic priority in 2018 will be technology investments that focus on improving the client experience, such as digital documents, e-signature and CRM tools.

According to TD Ameritrade Institutional’s 2018 RIA Sentiment Survey, RIAs intend to spend more on these priorities this year:

  • Marketing (23%)
  • Hiring/HR (17%)
  • Technology (16%)
  • Client relations (16%)
  • Legal/compliance (14%)

Advisors also forecast strong growth results in 2018, with 78% expecting their firm’s AUM to rise in 2018. Nearly half say assets will grow faster than they did in 2017.

This comes on the heels of a successful 2017. During the second half of the year, RIAs report that revenues grew an average of 15%, while AUM grew by 16%. Moreover, 65% of RIAs gained new clients last year, for an average growth rate of 16%, the survey results show

Advisors say their largest source of new clients remains full-service brokerage firms. Investors leaving national full-service broker-dealers comprised more than a third of their new clients in 2017, according to the findings.

While M&A plans are not in the works for most, RIAs which are considering a merger or acquisition want to acquire or add to their firms, not to merge or sell. The findings show that 50% of respondents said they are not planning any M&A-related activity in 2018, while 26% are interested in acquiring another firm(s) and 26% are looking to add new partners or owners.

RIAs believe the new tax law enacted in December will affect individual investors the most in 2018. They also predict the financial, materials, industrial and technology sectors will get the biggest boost. Nearly half say equities have “more room to run,” while a similar percentage expect bonds to decline in the current interest rate environment.


The largest potential roadblocks for 2018 include new regulations and a lack of consumer awareness about what makes independent RIAs different from other financial services providers. Survey respondents cited these top threats to RIAs’ growth in 2018:

  • Regulations (50%)
  • Lack of consumer awareness of RIAs (46%)
  • Wealth transfer to non-clients (43%)
  • Larger RIAs (40%)
  • Self-directed investors (26%)
  • Robo-advisors (24%)
  • Shortage of young advisors to hire (22%)
  • Wirehouses/brokerages (17%)

While 45% of respondents said they are “somewhat concerned” about the threat of robo-advisors to their business, only 1% said they are “extremely concerned.”

RIAs Prefer ETFs

Consistent with previous findings, 55% of independent RIAs say they use ETFs more than mutual funds or individual stocks when it comes to investing client assets.

The top reasons RIAs use ETFs are:

  • Asset allocation (78%)
  • Lower costs (69%)
  • Liquidity (60%)
  • Transaction costs (58%)
  • Access new asset classes (50%)
  • Replace individual stocks (40%)
  • New ETFs from preferred provider (21%)

While performance and total costs are important factors, advisors say the construction of the underlying index is the main reason why they chose a particular ETF.

In addition, a third of RIAs say assets for new ETF investments will come from cash in 2018, while 27% say the sale of mutual funds will fund new ETFs. Only 9% say the sale of individual securities will fund new ETF investments.

The findings were based on a telephone survey of 300 participants handling, on average, $161 million in client assets. It was fielded by MaritzCX on behalf of TD Ameritrade Institutional from Nov. 27-Dec. 7, 2017.

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