Registered investment advisors are coming off another year of double-digit growth in clients, revenue and assets, and they have a largely positive outlook for the overall U.S. economy, according a survey by TD Ameritrade Institutional.
The survey was released Thursday, as TDAI kicked off its national RIA conference, National LINC, in San Diego.
But while they are thriving, RIAs are feeling the heat competition from all sides — fee-based brokers, do-it-yourself investors, robo-advisors and other RIAs — is intensifying.
Sixty-three percent of RIAs in the survey added clients over the previous six months, at an average growth rate of 14%. About two-thirds saw an increase in revenue, while assets under management increased by 17%.
“The steady movement of assets into the independent wealth management channel shows no signs of slowing,” TD Ameritrade Institutional president Tom Nally said in a statement.
“RIA firms that have the ability to scale service and add capacity will be well-positioned to take advantage of the growth opportunity in front of them.”
Maritz conducted a telephone survey in the fourth quarter on behalf of TDAI of 301 independent RIAs with firm assets under management averaging $232 million.
Recent market volatility and recent disruptive geopolitical events have somewhat dampened advisors’ previous enthusiasm, the survey found. Half said they were optimistic heading into 2015, but 17% expressed pessimism — three times as many as at the top of 2014.
Even so, survey participants were generally bullish on the U.S. financial markets.
U.S. equities represented 53% of their clients’ assets, a 23 percentage point increase from 2010, while international holdings have dropped by two-thirds to 9% of client assets today.
Besides stocks, a quarter of client assets were allocated to fixed income, 9% to cash and the remainder to other asset classes.
Advisors in the survey were mainly concerned about the effect of regulatory changes on their firms, followed by the challenges of managing risk.
In fact, they perceived additional burdens and costs associated with such changes as the biggest competitive threat to their businesses.
Competition: Usual and Not-So-Usual Suspects
Fifty-seven percent of RIAs’ new clients in the past six months were dissatisfied customers from full-commission brokers, according to the survey.
However, when seeking new business, advisors increasingly found themselves competing with one another, as well as with others with alternative advisory models.
Notably, advisors were winning new clients from banks and other RIAs by at least twice the rate they did in 2012.