Independent RIAs Flock to ETFs for New Client
Assets in 2018
Company earnings and interest rates may drive the markets, but
the new U.S. tax plan will impact individual investors the most in
2018, independent registered investment advisors (RIAs) tell TD
Ameritrade Institutional1 in its latest survey.
In the TD Ameritrade Institutional 2018 RIA Sentiment Survey,
RIAs also say they expect their own businesses to keep booming this
year, cementing a decade of strong growth since the global
financial crisis.
The survey also reveals that seven in 10 RIAs are carrying over
last year's exuberance for the U.S. and global economies into 2018,
perhaps bolstered by the highs reached by all major market indices
in 2017.
These advisors predict the financials, materials, industrials
and technology sectors will get the biggest boost. About half say
equities have more room to run, and a similar amount expect bonds
to decline in the current interest rate environment.
But RIAs surveyed recognize that everyone may not share their
rosy outlook for 2018. They report that their clients are most
concerned about retirement issues, followed by taxes and estate
planning issues.
"Looking ahead to 2018, RIAs generally like what they see - for
their clients and for themselves," said Vanessa Oligino, Director,
Business Performance Solutions, TD Ameritrade Institutional. "And
when it comes to capitalizing on the current climate for their
clients, independent advisors increasingly look to ETFs as their
investment vehicle of choice."
Three hundred RIAs overseeing $161 million in client assets, on
average, participated in the latest annual sentiment survey, which
was fielded between November 27 and December 7, 2017, during
Congressional negotiations on tax legislation.
RIAs Prefer ETFs
When it comes to investing client assets, more than half of
independent RIAs say they use ETFs more than mutual funds or
individual stocks.
A third say assets for new ETF investments will come from cash
in 2018, and 27 percent say they will come from the sale of mutual
funds. RIAs are less apt to sell stocks to fund new ETF purchases,
however: just 9 percent say the sale of individual securities will
fund new ETF investments.
Although factors such as performance and total costs are
important, advisors say the construction of the underlying index is
the main reason they chose a particular ETF.
This year's survey also revealed that most RIAs do not buy or
switch ETFs simply because new offerings have been introduced by a
particular sponsor. Instead, advisors say their selections are
guided by asset allocation strategies or lower costs.
Growing RIAs Expect Another Boost in 2018
For much of the past decade, the RIA industry has enjoyed growth
amid the second-longest bull market since World War II. As they
look ahead, advisors surveyed are forecasting more of the same in
2018. Seventy-eight percent expect their firm’s assets under
management to rise in 2018 and nearly half say assets will grow
faster than they did in 2017.
These sunny projections come on the heels of a largely
successful 2017. RIAs report that during the latter half of the
year, revenues grew on average by 15 percent, while assets under
management grew by 16 percent.
Sixty-five percent of RIAs gained new clients last year, for an
average growth rate of 16 percent. Advisors say their biggest
pipeline for new clients remains the full-service brokerage firms:
investors leaving national full-service broker-dealers made up more
than a third of their new clients in 2017.
Growth takes investment, and RIAs are committing resources to
developing their firms. Last year, technology as well as legal and
compliance matters dominated firm spending. RIAs predict they will
make their biggest investments in marketing and hiring in 2018, in
keeping with their top strategic priorities: marketing and
enhancing the client experience.
These RIAs say that technology investments that will improve
their client experience - such as digital documents and
e-signature, and CRM tools - are on the table for 2018.
Could anything trip up their momentum in 2018? Advisors say
regulations are their biggest potential roadblock as well as a lack
of consumer awareness about what makes independent RIAs different
from other financial services providers.
Just 1 percent of survey respondents are extremely concerned
about the threat of robo-advisors on their business.
"RIAs naturally want to sustain their recent success, but they
can’t just sit back and expect tailwinds to propel their growth,"
said Oligino. "Though the competitive landscape has never been more
heated, we see many independent advisors doing what's needed to
help their long-term future."
Carefully consider the investment objectives, risks, charges and
expenses before investing. A prospectus, obtained by calling
866-766-4015, contains this and other important information about
an investment company. Read carefully before investing.
ETFs can entail risks similar to direct stock ownership,
including market, sector, or industry risks. Some ETFs may involve
international risk, currency risk, commodity risk, leverage risk,
credit risk and interest rate risk. Trading prices may not reflect
the net asset value of the underlying securities. Commission fees
typically apply.
About the Survey
The TD Ameritrade Institutional RIA Sentiment Survey was
developed to understand the views of independent registered
investment advisors (RIAs) on the economy, as well as their outlook
for their firms and the RIA industry. Results are based on a
telephone survey fielded by MaritzCX, on behalf of TD Ameritrade
Institutional, a division of TD Ameritrade, Inc., from November 27
through December 7, 2017. This year's survey included 300
participants handling, on average, $161 million in client assets.
The margin of error is +/- 5.6%.
TD Ameritrade Institutional and Maritz are separate and
unaffiliated and not responsible for each other’s services or
policies.
About TD Ameritrade Institutional
TD Ameritrade Institutional is a leading provider of
comprehensive brokerage and custody services to more than 6,000
fee-based, independent RIAs and their clients. Our advanced
technology platform, coupled with personal support from our
dedicated service teams, allows investment advisors to run their
practices more efficiently and effectively while optimizing time
with clients. TD Ameritrade Institutional is a division of TD
Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation.
About TD Ameritrade Holding Corporation
TD Ameritrade provides investing services and education to more
than 10 million client accounts totaling more than $1 trillion in
assets, and custodial services to more than 6,000 registered
investment advisors. We are a leader in U.S. retail trading,
executing more than 600,000 trades per day for our clients, nearly
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.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
/ SIPC
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation
Source: TD Ameritrade Holding Corporation
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version on businesswire.com: http://www.businesswire.com/news/home/20180109005410/en/
TD Ameritrade InstitutionalJoseph Giannone,
201-369-8705Communications + Public
Affairsjoseph.giannone@tdameritrade.com
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