Advisors Still Taking Assets From Wirehouses: TD Ameritrade RIA Survey

A survey of 501 advisors conducted on TD Ameritrade’s behalf in the last week of March found RIAs reporting that they’re continuing to grab assets from wirehouse firms, and that they were increasing their investments in their own firms—especially in technology—to improve efficiency and improve their bottom lines.

The results of TD Ameritrade’s quarterly survey, a blind sampling of advisors who custody at TD as well as at other custodians, “speak to the fact that advisors are continuing to grow and take assets from the Wall Street firms,” said George Tamer (left) of TD Ameritrade in a Wednesday interview with AdvisorOne.

Tamer, director of strategic relationships at the Jersey City, N.J.-based custodial firm, says that the survey results support what he and his team of practice management consultants are hearing in the field. “Business continues to be good,” for advisors, he says, and while they’ve “put the financial crisis in the rearview mirror, they’re keeping in mind the lessons learned” from the 2008-2009 crisis. “They’re not resting on their laurels,” Tamer says, but  instead are focusing on investing in operating efficiencies, particularly in technology tools to provide those efficiencies, which, when tied to their reported revenue growth, allows RIAs to increase their profitability.

There’s another bottom-line sign of the RIA model’s viability. Asked about the recent spate of M&A activity in the advisor technology space—notably Advent’s purchase of Black Diamond and Insignis’ acquisition of BridgePortfolio—Tamer said “there wouldn’t be the M&A investments we’re seeing if there wasn’t optimism about the RIA model.”

The growth in assets from Wall St. firms is not new, Tamer acknowledged, with TD’s advisor surveys over the last eight quarters consistently showing that at least half of RIAs’ new assets have come from those firms. In this most recent survey, respondents reported, he said, that “56% of new assets come from commission-based firms—wirehouses and other broker-dealers.”

The investments made by advisors in technology has been evident from the beginning of the financial crisis, with Tamer saying that “advisors realized one of the ways to get through this—to reign in expenses—is to invest in efficiency; they don’t see technology as an expense, but as an investment.” Tamer noted that it “might not be sexy to buy a CRM system,” but if doing so allows a firm owner to increase the firm’s human capital yield by “increasing non-revenue generating efficiency” it can produce clear bottom-line returns.

Growth in Firms; Optimism on Markets and Economy