Independent financial advisors appear to be capitalizing on their recent growth by making investments that will help sustain their firms for the long term, according to new advisory firm industry benchmarking research from TD Ameritrade Institutional.

“Advisors reported spectacular growth in 2017, but I’m especially pleased to see that many firms used some of these gains to improve their operations with an eye to increasing revenue and profitability for the long term,” said Vanessa Oligino, director of business performance solutions at TD Ameritrade Institutional, in a statement. “Though they may have proceeded cautiously in prior years, many firms saw 2017 as an opportunity to invest in themselves.”

The research, which is available in a new report 2018 FA Insight Study of Advisory Firms: Growth by Design, reveals that median annual client growth, the growth mechanism most indicative of business expansion, last year hit a record high of 7.8%.

According to the report, last year may represent the best year yet for participant firms across10 years of FA Insight studies. TD Ameritrade Institutional acquired the firm in 2016.

“No matter the metric, 2017 advisory firm growth rates were astounding, reaching levels not experienced since the industry emerged from the Great Recession,” the report states.

According to the report, record client increases were the most significant of the 2017 growth indicators, with the typical firm increasing its client base nearly 8%.

Meanwhile, median assets under management per client climbed 6.8% in 2017 to nearly $1 million. Firm AUM increased by 19.9%, compared with 12.5% in 2016 and nearly on par with 2009’s record of 20.4%.

Median annual revenue growth — at 15.8% in 2017 — was the highest since 2010 and more than double that of 2016. Typical firm AUM — which was aided by a rejuvenated stock market — increased nearly 20%, just a half percentage point off the record increase reached nearly a decade earlier in 2009.

Amid this growth, the study also finds that optimistic firm owners are reinvesting in their businesses. According to the report, these investments have been put on hold during less robust times.

“In 2016, firms reduced overhead spending to counterbalance two years of tepid revenue growth,” the report states. “…By 2017, with growth surging, overhead expenses and profits clearly took a different course.”

Firms spent more last year on office space, technology, marketing and business development — investments that may have been deferred in previous years when growth was more sluggish, according to the report.

The report also finds that many firms also added staff to meet with demand from the record number of clients brought with them new investable assets.

According to the study, firms added team members at a record pace. The typical firm increased headcount from five to six full-time equivalents to support current growth and in anticipation of future needs.

The increase in overhead expenditures, in addition to increased compensation for revenue roles, led to a decline in profit margins, or revenues after overhead and direct expenses. In 2017, the median operating profit margin dropped to 19.7% from 24.4% in 2016, according to the study.

The research was completed from February to March 2018 through an online survey with 321 independent advisory firms. All survey respondents have been in business for at least one year, generate a minimum of $150,000 in annual gross revenue and serve individuals or households as primary clients.