RIAs Keep a Close Watch on the Economy and
Markets, Remain Focused on Technology and Marketing to Sustain
Growth In 2020
Get ready for another great year, bullish registered investment
advisors (RIAs) tell TD Ameritrade Institutional1 in a new survey
about their 2020 expectations for the economy, the markets and
their firms.
More than two-thirds of independent RIAs participating in the TD
Ameritrade Institutional 2020 RIA Sentiment Survey are optimistic
about the U.S. economy, and more than half expect stock prices to
continue to increase. Fifty-eight percent are upbeat about the
global economy, a 20 percent increase from last year.
Even as RIAs see a relatively smooth road ahead in 2020, they
are watching headlines on the U.S. economy, corporate earnings and
trade for their impact on client portfolios. They expect the
Information Technology, Health Care and Financial sectors to
outperform this year.
“Though headlines during 2019 may have whipsawed markets,
independent RIAs maintained their steady focus on doing the right
things for their clients and investing in their firms,” said Tom
Nally, president of TD Ameritrade Institutional, a provider of
brokerage and custody services to more than 7,000 RIAs. “Year after
year, more investors turn to RIAs for financial planning
guidance.”
Most RIAs envision themselves on a continued growth trajectory
this year, even as they juggle compliance and regulatory issues as
their top management challenge. Three out of four RIAs expect
they’ll grow in 2020, and more than 40 percent are planning on
faster growth than in 2019.
RIAs Say Investing Palates Have Broadened
RIAs say that their clients have an increased appetite for
stakeholder-driven and “grass”-roots investing: 56 percent are
interested in ESG (environmental, social and governance)
investments, while half want to know more about cannabis-related
stocks.
More advisors are turning to third parties to help manage
investments. Nearly 30 percent tap into third parties to manage
client portfolios, almost three times the amount that did so in
2018. Model portfolios, such as those available through TD
Ameritrade Institutional’s Model Market Center, are RIAs’
third-party manager of choice.
And despite all the fanfare, the industry’s move to $0 trade
commissions on ETFs2 isn’t the only factor when it comes to
advisors choosing investments for client portfolios. Sixty-five
percent of advisors said that $0 commissions trade offers do not
currently influence their decisions to use exchange-traded funds
(ETFs) over mutual funds. That said, 46 percent say they will
allocate more to ETFs in the future.
2019 was a Very Good Year
Against a backdrop of ongoing macro-environment uncertainties,
2019 delivered growth on all fronts for RIAs. Three-fourths of
advisors said revenues jumped, with 14 percent increase on average.
Eighty-two percent reported growth in assets under management, with
16 percent growth on average.
Seventy-one percent of advisors surveyed brought in new clients
in 2019. National brokerage firms, whether wirehouses or
independent broker dealers, continued to be the main source of new
clients.
When investing in their own firms, independent advisors
increased their spending the most on technology, followed by legal
and compliance.
RIAs Set Sights on More Marketing in 2020
Advisors plan to increase their marketing spend in 2020, and up
their technology investments, acknowledging that a healthy blend of
both can benefit their bottom lines. Top initiatives to drive
growth include increasing client referrals and using social media
more. The largest technology investments planned by RIAs in 2020
will be on performance reporting and CRM tools.
Today’s advisors are committed to staying engaged with their
clients – in fact, they are spending more time with clients than
they did five years ago. But the focus is not solely on their
investment portfolios. The average RIA spends nearly half their
time with clients on topics outside of investment management.
How are they doing this? Newer technology tools are enabling
firms to stay in closer touch with more clients than ever before.
Thirty-six percent use video conferencing, while an additional 31
percent are considering doing so in 2020. And though only 14
percent of advisors use secure texting now, these capabilities are
on the radar for an additional 41 percent in 2020.
RIAs are also exploring new ways to communicate with clients and
strengthen relationships, such as producing flash briefings on
smart devices and personalized client videos.
RIAs See Increased M&A – Among Other Firms
Though most advisors surveyed believe the pace of M&A will
accelerate for the industry in 2020, the majority say they are
taking a wait-and-see approach when it comes to their own firms.
Most said they are not quite ready to participate in the
consolidation trend.
Nine out of 10 advisors say they have no plans to sell their
firm in the next two years, though there are plenty of offers out
there for those who are interested. RIAs surveyed were ambivalent
on using M&A as a growth strategy, and roughly a third would
not consider a merger or acquisition at all in order to boost firm
growth.
“Innovation and automation have made the RIA path more
beneficial for more advisors, making this a great time to be an
RIA,” said Nally. “Advisors have more tools and capabilities at
their disposal than ever before. It’s no wonder so many firms are
achieving remarkable growth while providing an exceptional
experience to investors.”
Click here to download highlights of the TD Ameritrade
Institutional 2020 RIA Sentiment Survey.
1
TD Ameritrade Institutional is a division
of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade
Holding Corporation.
2
At TD Ameritrade, $0 commission applies to
online U.S. exchange-listed stocks, ETFs, and option trades. $0.65
per options contract fee applies to options trades, with no
exercise or assignment fees. A $6.95 commission applies to online
trades of over-the-counter (OTC) stocks, which include stocks not
listed on a U.S. exchange.
About the Survey Results for the TD Ameritrade
Institutional 2020 RIA Sentiment Survey are based on an email
survey, conducted by MaritzCX on behalf of TD Ameritrade
Institutional, a division of TD Ameritrade, Inc., between Nov. 22
and Dec. 1, 2019. 301 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 Institutional TD Ameritrade
Institutional empowers more than 7,000 independent registered
investment advisors to transform the lives of their clients. It
provides powerful technology and resources that help simplify
running a business and let advisors spend more time doing what
matters most — serving their clients. Through meaningful
innovation, steadfast advocacy and unwavering service, TD
Ameritrade Institutional supports 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
Corp.
About TD Ameritrade Holding Corporation TD Ameritrade
provides investing services and education to approximately 12
million client accounts totaling approximately $1.3 trillion in
assets, and custodial services to more than 7,000 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 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.
Source: TD Ameritrade Holding Corporation
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version on businesswire.com: https://www.businesswire.com/news/home/20200107005319/en/
Joseph A. Giannone Communications + Public Affairs W:
201-369-8705 joseph.giannone@tdameritrade.com
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