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Industry Spotlight > RIAs

Fiduciary Duty Top Reason Investors Prefer RIAs: TD Ameritrade Survey

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TD Ameritrade Institutional released an advisor sentiment survey on Monday which found that the top three reasons their new clients choose to work with an independent registered investment advisor are: because RIAs are required, as fiduciaries, to offer advice that is in the best interest of clients (29%); RIA firms offer more personalized service and competitive fee structure (21%); and investors are dissatisfied with full commission brokers (19%).

In releasing the results of the quarterly survey polling 502 RIAs, Tom Bradley, president of TD Ameritrade Institutional, said “the survey results support what we believe is a long-term trend of investors gravitating to the fiduciary model.”

Over the past few years, Bradley continued, “we’ve seen RIAs benefit from money in motion due to disruption at traditional full-commission firms. And as the dust has settled, investors can see more clearly the potential benefits of hiring an RIA.” Investors, he said, “may increasingly seek the confidence that can come from working with independent RIAs who sit on the same side of the table and are required by law to put their clients’ interests first.”

The survey found that the majority of new RIA assets are coming from traditional full-commission firms (55%).

The survey–which included 502 RIAs participating in a telephone survey from Aug. 15-26–also showed that extreme market fluctuations, natural disasters and ongoing European economic woes have some advisors feeling less confident about the economy. The survey found that many advisors are growing increasingly concerned about the macroeconomic environment and its impact on their businesses.

More than half of advisors polled said they “are pessimistic to very pessimistic” about the outlook on the U.S. economy over the next three months, up from just 18% the previous quarter.

Additional Key Findings from the advisor sentiment survey include:

  • Business Growth – Nine in 10 RIAs report their total number of clients increased or remained steady over the past six months. RIAs surveyed show an average revenue growth rate of 18% and added clients at an average rate of 13% over the past six months. However, when asked about the current economic climate and its impact on their businesses over the next 12 months, growth (25%) and profitability (28%) were top concerns along with the macroeconomic environment (36%) and regulatory changes (38%).
  • Business Spending – Eighty-five percent of RIAs surveyed say they avoided cost cutting over the past six months. However, fewer RIAs say they increased their budgets. Twenty-three percent of advisors reported an increase in spending, down from 34% the previous quarter. Advisors who increased their budgets increased spending an average of 23% and overwhelmingly chose to invest in technology and marketing. Advisors who decreased business spending trimmed an average of 19% of total expenses, mainly cutting travel and client appreciation and entertainment activities.
  • Career Outlook – While RIAs are increasingly negative in their economic outlook, with over 50% indicating pessimism, job satisfaction remains high as eight in 10 RIAs are somewhat to completely satisfied with their careers.


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