By TD AMERITRADE Institutional
Despite the stuttering economy and possible regulatory changes coming out of Washington, independent registered investment advisers (RIAs) are enjoying consistent growth in their businesses and are generally optimistic about their futures. As a result, more than two-thirds of advisers recently reported that they are "satisfied" or "completely satisfied" with their careers.
According to TD AMERITRADE Institutional's quarterly RIA survey, released in January, RIAs have plenty to feel good about. First, 60 percent of advisers surveyed reported client growth, up from 49 percent six months ago. More importantly, only 9 percent of advisers reported a drop in clients in the last quarter of 2009, versus 18 percent last summer.
Not surprisingly, 65 percent of that new client growth came from wirehouse and full-commission brokers. More than half of those surveyed reported that new clients were coming to them because of dissatisfaction with service, advice, performance or fees at full-commission brokerage firms and the belief that RIAs offer more personalized service and competitive fee structures.
"Independent advisers are clearly taking advantage of the missteps other advisers and brokers made during the past year," says Brian Stimpfl, managing director of adviser advocacy and industry affairs for TD AMERITRADE Institutional.
Loosening the Purse Strings
With client numbers growing, advisers are starting to feel a bit more comfortable, and they are loosening up their purse strings. The number of RIAs who reported that they had cut spending in the last quarter of 2009 dropped to 25 percent, compared with 30 percent who were cutting their budgets six months earlier. For advisers who reported increasing their spending, the survey found that the top two areas where they are doing so are in marketing and technology.
"Advisers continue to view marketing and technology as opportunities to drive growth and efficiency," Stimpfl explains.
Despite the positive momentum in the industry, however, RIAs reported a growing concern about regulatory changes coming out of Washington. In fact, 47 percent listed regulatory changes as their top concern for the next 12 months, up from just 34 percent six months ago. That increased concern is illustrated by the fact that 31 percent of advisers said they plan to boost spending on compliance-related technology over the next 12 months.
Still, RIAs are increasingly bullish. In the fourth quarter 2009, 44 percent reported feeling optimistic about the U.S. economy over the next three months, compared with just 38 percent six months ago.
"Advisers are looking ahead and they like what they see," Stimpfl says. "They are happy, and prospects for the future are bright."
Results are based on a telephone survey conducted by Maritz Inc. between Dec. 2 and Dec. 17, 2009 of a random sample of 507 RIAs who custody with TD AMERITRADE Institutional, as well as other independent RIAs from across the country. Maritz Inc. and TD AMERITRADE Institutional are separate, unaffiliated companies and are not responsible for each other's products and services. TD AMERITRADE Institutional and FPA are separate, unaffiliated companies and are not responsible for one another's services and policies.
Adviser Spending Trends
In what areas have you increased spending?
|Client appreciation activities/entertainment||28%|
|Salaries and bonuses||21%|
What types of technology will you invest in for 2010?
|Mobile (smart phones)||20%|
Source: Telephone survey conducted by Maritz Inc., Dec. 2-17, 2009.