RIAs expect more strong growth in 2019, as they
welcome investors seeking advice, attract new talent, and adopt
technology that enhances the client experience
Volatile markets in 2018 drove more investors to seek out the
guidance of independent registered investment advisors (RIAs), with
RIAs citing nearly 20 percent growth, on average, both in assets
and revenues in 2018, TD Ameritrade Institutional1 found in its
latest RIA Sentiment Survey.
Looking ahead, RIAs expect the growth trend to continue.
Advisors are approaching 2019 with their usual pragmatic optimism,
keeping the daily market drama in perspective. They say that U.S.
interest rates, corporate earnings and international trade issues
are what matter most to client portfolios.
“In times of market uncertainty, investors seek out financial
guidance from knowledgeable professionals – independent advisors
who focus on their goals, risk tolerance and other details of their
financial lives,” said Vanessa Oligino, director, business
performance solutions at TD Ameritrade Institutional. “RIAs help
clients understand their choices for weathering different market
cycles so they can keep pursuing their goals.”
For now, RIAs expect the financial markets will continue helping
investors build wealth. Sixty-three percent of independent advisors
are optimistic about the U.S. economy for the near-term, and 47
percent are optimistic about the global economy. Similar to last
year, 47 percent expect stock prices will continue to increase.
Advisors believe the Health Care sector will benefit most from
the incoming Congress, with Consumer Staples, IT and Financials
also getting some lift.
Amid the ups and downs, investors are asking about cannabis
stocks as well as environmental, social and government (ESG)
investments, two sectors that were in the headlines in 2018.
Forty-eight percent of RIAs say clients want to know about
cannabis-related stocks and 55 percent say clients are interested
in ESG investments.
By contrast, just 15 percent of advisors say that clients showed
interest in cryptocurrencies.
RIAs Look to the Future
RIAs report that both their assets and firm revenues grew by 18
percent, on average, in the latter half of 2018, with the number of
new clients increasing by an average of 14 percent. More than
three-fourths of advisors expect to growth to continue in 2019, and
nearly half say they’ll grow faster than last year.
One in four of advisors’ new clients had previously been
self-directed or was new to investing, according to the survey.
Nearly a third of their new clients left commission-based platforms
in favor of independent, fee-based fiduciary advice.
Other growth drivers include expanded usage of digital marketing
to complement traditional approaches to marketing and fuel new
business development. Though client referrals hold the top spot,
advisors say upgrading their presence online, using social media
campaigns, and sharing digital content round out their top five
business development tactics, along with hosting seminars and
events.
To manage and sustain growth going forward, independent advisors
want talent from both ends of the experience spectrum. They are
most likely to target experienced advisors currently working for
other RIAs, professionals who already have clients, and also
college interns just starting out. RIAs will also look to expand
their service offerings to meet client demand, potentially through
an acquisition. Indeed, one in four advisors is considering mergers
and acquisitions (M&A) as a potential growth strategy.
Spotlight on Technology
Headlines around data breaches and cybersecurity are making an
impact: RIAs say cybersecurity is the most important issue facing
the industry and should be a top concern for regulators. Outside of
compliance issues, advisors say technology is their biggest
management challenge. Technology was their biggest operational
spend in 2018, and that should continue into 2019, with advisors
devoting the biggest part of their technology budgets to
cybersecurity.
At the same time, advisors say that email remains the
communication channel preferred by clients in their 50s and younger
– Generation X, Millennials and Generation Z – though texting and
video chat are starting to make in-roads. Baby Boomers and Seniors
-- Americans in their 60s, 70s and older -- prefer the telephone
for staying in touch with their advisors, though they are quite
comfortable with email.
This ongoing popularity of email among clients -- and hackers --
underscores the importance of a vigilant approach to managing data
security.
“Many data breaches start with compromised email, which is why
we encourage RIAs to understand the security risks that come with
email, as well as with newer communication channels, and implement
processes and procedures to protect their clients and their firms,”
said Oligino.
But make no mistake, advisors appreciate that technology’s
benefits can outweigh its risks. More than 40 percent believe that
technology has enabled them to connect with more clients compared
to three years ago. Roughly one third say they understand the
potential that blockchain technology has for their firm and their
clients.
On the other hand, they remain more skeptical of advanced
technology that may appear to replace human interaction.
“Younger investors expect and demand a technology-enabled
experience, and we strongly encourage RIAs to move in that
direction to meet that demand,” said Oligino. “Advanced technology,
such as augmented reality and machine learning-enabled fintech
tools, may seem futuristic today, but these technologies will
become commonplace before you know it.”
To see more highlights from the TD Ameritrade Institutional 2019
RIA Sentiment Survey, click here.
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation.
About the TD Ameritrade Institutional 2019 RIA Sentiment
SurveyResults for the TD Ameritrade Institutional 2019 RIA
Sentiment Survey are based on a telephone survey, conducted by
MaritzCX on behalf of TD Ameritrade Institutional, a division of TD
Ameritrade, Inc., between Nov. 27 and Dec. 13, 2018. 302
independent registered investment advisors participated in this
study. Participants, both clients of TD Ameritrade Institutional
and non-clients, were asked to share their views on economy, the
outlook for their firms and the RIA market overall. The margin of
error for the survey is ± 5.6%. MaritzCX and TD Ameritrade are
separate and not affiliated and not responsible for each other's
services or policies.
About TD Ameritrade InstitutionalTD Ameritrade
Institutional empowers more than 6,000 independent registered
investment advisors to transform the lives of their clients. We
provide powerful technology and resources that help simplify
running a business and let advisors do what matters most — spend
time serving their clients. Through meaningful innovation,
steadfast advocacy and unwavering service, we support RIAs as they
build businesses that positively impact their clients and
communities.
TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., member FINRA/SIPC, a brokerage subsidiary of TD Ameritrade
Holding Corporation.
Source: TD Ameritrade Holding Corporation
About TD Ameritrade Holding CorporationTD Ameritrade
provides investing services and education to more than 11 million
client accounts totaling approximately $1.3 trillion in assets, and
custodial services to more than 6,000 registered investment
advisors. We are a leader in U.S. retail trading, executing an
average of approximately 800,000 trades per day for our clients,
more than a quarter of which come from mobile devices. We have a
proud history of innovation, dating back to our start in 1975, and
today our team of nearly 10,000-strong is committed to carrying it
forward. Together, we are leveraging the latest in cutting edge
technologies and one-on-one client care to transform lives, and
investing, for the better. Learn more by visiting TD Ameritrade’s
newsroom at www.amtd.com, or read our stories at Fresh
Accounts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190108005242/en/
Alyson NikuliczCommunications + Public
Affairs201-755-4116alyson.nikulicz@tdameritrade.com
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Mar 2024 to Apr 2024
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Apr 2023 to Apr 2024