RIAs Overwhelmingly Optimistic for 2013 Growth

TDAI finds advisors ready to plan, implement strategic initiatives and technology investments

Forget the Dow. The greatest measure of growth might come from advisors themselves.

TD Ameritrade surveyed 502 RIAs on everything from top initiatives to their investment in technology to how they're attracting new clients.

The clearing and custodial giant found that advisory firms are gearing up for growth in 2013. The company’s Institutional Advisor Index survey says that 97% of respondents report their total number of clients increased or remained steady over the past six months. Nearly nine in 10 RIAs expect a faster asset under management (AUM) growth rate this year.

Advisors indicated they would implement a variety of planning initiatives to prepare for their firm’s growth over the next six months. Conducting internal strategic planning discussions (67%), using benchmarking studies and white papers for guidance (37%) and conducting workshops sponsored by custodians or other vendors (20%) top the list of tactics advisors are planning.

“RIAs find themselves in an interesting paradigm—a challenging business environment combined with an unprecedented opportunity,” Jim Dario, managing director of product management with TD Ameritrade Institutional, said in a statement. “Many leading firms have seized the opportunity and created dynamic, fast-growing and profitable enterprises by identifying the cost drivers in their businesses. RIAs are able to build long-term value for their firm by leveraging technology that delivers consistent client service and scales with firm growth.”

Advisors’ Top Strategic Initiatives

Advisors surveyed say deploying technology to increase scale (63%), systematizing client service and delivery (58%) and training and developing staff skills (58%) are top strategic initiatives for growth over the next six months.

Investing in Technology

Investing in technology (63%) is the top infrastructure investment advisors plan to make over the next six months to accommodate business growth. Advisors surveyed also plan to invest in customer relationship management tools (33%), performance reporting tools (31%) and mobile devices (28%).

“Adopting new technologies alone will not create office efficiencies, improve client service or provide a pathway to more profitable growth,” Dario added. “These solutions will need to be integrated within a firm’s workflows and adopted by staff members as part of their day-to-day responsibilities to ensure consistency and effective impact on business processes.”

RIAs Attracting New Clients Through Referrals

Advisors report a majority (86%) of growth opportunities come from referrals, including client referrals (56%), center-of-influence referrals (17%) and third-party referrals (11%). To attract new clients, RIAs are considering new niche clients (34%), adding new markets (26%) and adding new expertise (26%).

“Not only are top firms proactive in developing referrals, they are also using technology to systematize the referral process through the use of CRM dashboards and business analytics tools,” Dario said. “By knowing precisely where each referral opportunity is in the sales pipeline, advisors can nurture each prospect step by step with a timely and thoughtful communications approach.”

Advisor Headwinds

Increased compliance requirements (57%), regulatory changes (56%) and an aging client base (56%) were identified as potential headwinds to long-term growth. To challenge any headwinds, 40% of advisors plan on increasing marketing and business development spending in the next six months to bolster potential growth.

Most advisors (71%) indicated that they were not considering merger and acquisition activities as part of their growth strategy. Of the few advisors that are considering M&A activities over the next six months, acquiring another firm (14%) or adding new partners or owners (13%) to their firm were identified as top strategies among RIAs.

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