RIA Client Lists Continue to Grow

The quarterly survey of 500 RIAs said this growth is up 5% over the same time last year. Fewer RIAs are reporting a loss in their number of clients, 5% compared to 8% last year.

Survey respondents said the majority of their new assets came from traditional full-commission brokerages. They continue to win business from traditional full-commission firms and broker/dealers at a strong and steady rate, with a majority (56%) of new business originating from these competitors.

“The survey shows RIAs’ independent, fee-based and fiduciary approach to wealth management is a key consideration when investors are choosing an adviser,” said Tom Bradley, president, TD Ameritrade Institutional. “RIAs surveyed indicate their new clients prefer the personalized service and competitive fee structure provided by independent advisers and that, as fiduciaries, RIAs are required to offer advice that is in the best interest of clients.”

Despite thriving businesses, TD Ameritrade found several issues that are a cause for concern for RIAs. The impact of regulatory changes (40%), profitability (28%) and the macro-economic environment (27%) top the list of concerns RIAs have for their practices over the next twelve months.

TD Ameritrade data shows RIAs are a pragmatic group and take action in the areas where they can exert control; so while uncertainties remain regarding pending financial reform, RIAs are taking action in areas such as business growth, improving profitability, and operational efficiency.

The levels and direction of spending vary in this quarter’s survey. The number of advisers decreasing business spending is down 40% over the last year, even though 90% of RIAs surveyed say they avoided cost cutting over the past quarter. Some advisers increased business spending; the most common categories benefitting from increased budgets are technology (75%), marketing (46%) and salaries and bonuses (39%). Advisers who decreased business spending trimmed an average of 19%of total expenses.  The categories adversely affected include technology (49%), marketing (45%) and travel (40%).

When asked about market conditions, RIA respondents remain steady and bullish in their long-term approach to investment management, with a 48% allocation to equities, up 5-percentage points from the previous quarter. The survey indicates advisers continue moving out of cash as allocations are down slightly from 8% to 7% from the previous quarter. Fixed income (26%) and International investments allocations (14%) are down from the previous quarter. Advisers surveyed predict Oil & Gas, Technology and Basic Materials sectors will be the best performing and Financials, Utilities and Consumer Goods will be the worst performing over the next twelve months.

Overall, RIAs have an increasingly positive outlook for the economy, with over 53% indicating optimism, up more than 20% from the previous quarter.