RIAs See Bright Future in 2017: TD Ameritrade

In fact, just 3% of advisors counted technology among the factors that would have the greatest impact on their firms. Regulators were seen as the top competitive threat to advisors’ firms, and 20% said regulation had the potential to have the greatest impact on their firm. Even so, just 14% of respondents said their compliance budget would receive the bulk of their resources this year.

Nally said that “RIAs need to deliver a great experience, build firms that are more scalable and make sure they are compensated for all the services they provide. By investing in themselves, embracing technology and articulating all the value they deliver, RIAs can increase their firms’ chances for sustainable growth.”

In addition to increasing their marketing budgets, 16% of advisors said they also planned to increase their hiring and HR budget, and only 3% said they would spend more on outsourcing. Advisors reported cutting more from hiring than any other budget initiative last year; they’re clearly feeling more optimistic about growth opportunities in their firms.

Increasing advertising was the top marketing strategy reported by advisors, the survey found. Almost half said they were looking to add expertise or new niche clients.

Over 80% of advisors said they were unconcerned about competition from robo-advisors, mostly because they don’t see them as competition. Almost 90% said they serve a different type of client from the ones who are attracted to robo-services. Despite growth in the number of robo-advisors in the market and the assets they’ve attracted over the past few years, 70% said it hasn’t impacted their own firm’s growth, and 68% said their clients haven’t shown any interest in automated advice providers.

As a result, just 4% of RIAs said adding a robo-advisor was their top technology priority as a way to drive growth. (A larger group, 16%, said a robo-advisor was one among many services they would be interested in introducing.)

“RIAs have been the fastest growing channel in the financial advice marketplace in large part because they offer investors a personalized, client-first approach. At the same time, they have to find ways to navigate the myriad market forces converging on the industry if they want to keep growing,” Nally said. “RIAs can continue to grow by facing challenges head on, whether that means developing a robust retirement plan business, attracting a new generation of clients or embracing new technology to deliver a better digital experience.”

Finally, the industry’s widespread reluctance to address succession planning may finally be changing, and all it took was a proposed rule from the Securities and Exchange Commission. Almost 60% of RIAs in TDAI’s survey said they have a formal, documented business continuity and transition plan in place. Another 18% said they had a plan in the works. A full 80% of respondents said they were aware of the SEC’s proposed rule to require such plans. Rule 206(4)-4 would require firms to have business continuity plans in place that address the unexpected loss of key personnel, as well as temporary disruptions like natural disasters or cyberattacks. 

— Check out No Longer a Cottage Industry on ThinkAdvisor.