Advisors are optimistic about the economy and their businesses this year, according to a survey by TD Ameritrade Institutional. TDAI found advisors are planning to spend more on marketing, business development and technology in 2017.
The annual RIA Sentiment survey was conducted in the weeks following the presidential election in November, and asked respondents to share their outlook for equity sectors under a new president. Eighty percent of respondents said the financial sector will improve under the new administration. Two-thirds expect improvement in the materials and industrials sectors, and 57% of RIAs said the energy sector will likely improve. Advisors were least confident about the utilities sector; 40% believe it will get worse in 2017.
As for issues that will affect client portfolios, advisors were most concerned about interest rates and corporate earnings, followed by the incoming administration.
TDAI suggested in a press release that advisors’ optimism for 2017 is carried over from a strong 2016. Seventy percent of respondents said they grew assets last year and 56% added clients, both by an average of 17%. Sixty percent of respondents said they grew their revenues, reporting an average increase of 16%.
“These are good days for independent RIAs, yet we can’t expect market tides will always rise,” said Tom Nally, president of TD Ameritrade Institutional, in a statement.
Over a quarter of respondents said the overall economy would have the greatest impact on their firms in 2017. The survey found 70% of RIAs are optimistic about the U.S. economy over the next 12 months, and 55% felt the same about the global economy. Over half said they expect the U.S. stock market to increase.
TDAI added some new questions to the RIA Sentiment survey last year, including questions about competition, technology and the average client age, which, as of 2015, is 62.1, according to PriceMetrix, up from 61.5 in 2014. The average age of new clients also increased in 2015, from just over 56 to 56.8.
Advisors are less concerned about the aging client base than they were last year. With over half of respondents expecting to grow AUM more quickly than they did in 2016, they’re clearly not worried about replacing retiring clients’ assets.
Advisors Shifting Investment Priorities in 2017
Advisors increased their technology budgets by a third in 2016, and spent more on compliance and marketing than they did the prior year. Looking ahead at 2017, most advisors said they would spend more on marketing. Technology and compliance are still important, but less than 20% of advisors said they would be increasing those budgets.