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What RIAs Are Really Thinking About Now, in 5 Charts: TD Ameritrade

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Equity markets soared in 2017, boosting the asset level of many financial advisors.

But advisors had to content with a variety of regulatory and compliance issues, too, which entailed substantial investments of their time and spending.

After nearly a decade of strong growth since the financial crisis, how upbeat are today’s advisors? And what are their top concerns for business growth this year?

These questions were tackled in TD Ameritrade Institutional’s 2018 RIA Sentiment Survey, released this week.

The latest poll includes RIA views on the stock markets and the overall investment and industry climate for both investors and advisors.

“Looking ahead to 2018, RIAs generally like what they see — for their clients and for themselves,” said Vanessa Oligino, director of business performance solutions for TD Ameritrade Institutional, in a statement.

For the poll, the firm spoke with 300 RIAs overseeing an average of $161 million in client assets. The interviews took place in late November and early December, during congressional negotiations on tax legislation.

Read on for more details on what advisors are most concerned about for the year ahead:


With the rapid pace of tax changes taking place, it’s not surprising that 87% of RIAs polled viewed the tax plan as a top issue affecting client portfolios.

This factor is followed by corporate earnings, 85%, and interest rate increases, 79%.

In last year’s survey, the top concerns were rising rates, 89%; corporate earnings, 88%; and the incoming administration of President Donald Trump, 83%.

According to former tax attorney Andy Friedman, advisors must support their clients in navigating the Tax Cuts and Jobs Act. Individuals’ and businesses’ tax situations can change, says Friedman, as “many of the provisions” in the law are slated to expire.

Friedman, the publisher of The Washington Update, adds that the new tax law repeals the deduction for investment fees and expenses, such as advisory fees paid in connection with separately managed accounts.

He also points out that businesses should pay close attention to the changes for pass-through entities. Business income earned by those entities (partnerships, limited liability companies and S corporations) flows through to the owners’ tax returns under the new law as opposed to being taxed at ordinary income rates.

As for corporate earnings, reports on results from the final period of 2017 will be issued starting this Friday.


While taxes matter to clients, according to 62% of RIAs surveyed, investors are more concerned with having enough money to retire, 87%, and what they can spend in retirement, 81%.

Clients are broady affected by the changes to the tax code. But there are other changes afoot, as well.

For instance, as part of the new tax legislation, a new type of Consumer Price Index will be used used for marginal personal tax rates, tax credits and the standard deduction: the Chained Consumer Price Index for All Urban Consumers, or C-CPI-U, instead of the more traditional CPI-U.

The chained CPI adjusts for changes in purchases as consumers substitute cheaper products and services for more expensive ones, and thus usually rises more slowly than the traditional CPI measure. This means taxpayers will move more quickly into higher brackets as their incomes rise, while the tax credits they receive and standard deduction they take will rise more slowly.

Furthermore, tax and Social Security observers are concerned there could be steps taken to index the Social Security cost-of-living adjustments, or COLA, to the index.

For 2018, there is a 2% COLA on Social Security benefits. However, all or most of the increase, which is roughly $25 for the typical recipient receiving an average $1,250 monthly benefit, will likely be eaten up by an increase in Medicare Part B, according to The Senior Citizens League.

Social Security benefits did not rise at all in 2016 and increased just 0.3% in 2017.

Medicare Part B premiums are one of many costs that can erode the value of Social Security payments. Since 2000, Social Security benefits have lost 30% of their purchasing power despite cost-of-living increases, according to a study published by The Senior Citizens League. The study found that although Social Security COLAs increased benefits 43% since 2000, typical expenses for seniors jumped twice that much.

In addition to increasing costs for Medicare Parts B and D, those expenses include Medigap and Medicare Advantage plans and out-of-pocket medical expenses as well as homeowners’ insurance, real estate taxes and utilities.

Despite advisors’ and clients’ concerns, RIAs say that their growth rate will expand at a faster pace in 2017 than last year, 48%, or grow at a rate that is slower than last year’s pace, 30%.

Just 21% see their asset level as remaining the same, and only 2% see a decline on the horizon.  

These upbeat projections come on the heels of a very good 2017, according to TD Ameritrade Institutional.

In the second half of last year, 85% of RIAs say, their level of client assets grew. Overall, assets under management grew by 16% on average.

The average AUM growth rate was 17% in late-2016, up from 15% in the final six months of 2015.

Where is the pipeline for RIA growth?

Advisors say their biggest pipeline for new clients is the full-service brokerage channel. Investors leaving national broker-dealers should make up more than one-third, or 34%, of RIAs’ new clients in 2018.

In 2017, this channel represented 31% of new clients for registered investment advisors.

That’s up from 28% in 2016, according to TD Ameritrade.

Another growth channel is independent broker-dealers — which could bring in 17% of clients in 2018 vs. 15% in 2017, RIAs say.


Growth takes investment. As a result, RIAs say they plan to commit resources to developing their firms. Last year, technology as well as legal and compliance matters dominated firm spending.

This year, though, 23% of RIAs predict they will make their largest investments in marketing. Another 16% want to invest in the associated area of client relations.

Seventeen percent plan to do more hiring in 2018, followed by 16% investing in improved efficiency.

RIAs surveyed say that technology investments that are most important to them include digital documents and e-signature, along with CRM tools.

“RIAs naturally want to sustain their recent success, but they can’t just sit back and expect tailwinds to propel their growth,” said TD Ameritrade’s Oligino, in a statement. “Though the competitive landscape has never been more heated, we see many independent advisors doing what’s needed to help their long-term future.”

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