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RIAs Adding Clients, Boosting Revenue During Pandemic: TD Ameritrade

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With the novel coronavirus raging across the U.S. at midyear, TD Ameritrade Institutional decided to ask independent RIAs how the pandemic was influencing their views on the economy, the outlook for their firms and the RIA market overall.

Fifty-eight percent of survey participants reported that they had continued to bring in new clients during the lockdown, with client bases increasing by some 6% during this time.

Forty-three percent said their assets under management had increased, by 8% on average, and 40% had seen revenue increase at a similar rate.

“The saying, ’Keep calm and carry on’ has served advisors well during these unprecedented times, as they help their clients — and themselves — make sense of, and adapt to, current events that are impacting their long-term goals,” Vanessa Oligino, managing director of business performance solutions for TD Ameritrade Institutional, said in a statement.

“The results show that investors want financial guidance they can trust, which is why RIAs are growing even as they are having to pivot rapidly and in some cases, rethink large portions of their operations.”

Respondents had a subdued view about the prospects for the U.S. and global economy for the remainder of this year, but some two-thirds of advisors expressed optimism about 2021.

Although only 25% said they expected stocks to increase by year-end, 62% said they would do so next year.

The majority of RIAs are carefully watching headlines on the U.S. economy, the November presidential election and corporate earnings for their effect on client portfolios, according to the survey.

In addition, the survey showed that 61% of advisors expected the information technology sector to outperform this year, followed by 47% who said health care and 18% financial, consistent with their expectations at the start of 2020.

True North Market Insights conducted the online survey in late July among 158 independent RIAs — both clients of TD Ameritrade Institutional and non-clients — with an average of $234 million in assets under management.

A Different Looking Office

The survey results showed that RIAs remained committed to taking care of their clients as the number of positive virus cases rose across the country. But for most firms, it was not back to “business as usual.”

Sixty-one percent of RIAs reported that they were already back in the office, although health concerns and precautionary measures had changed what this looks like for many.

Thirty-six percent of firms were juggling split in-office and remote work schedules to allow for social distancing, and 28% were providing staff with PPE.

Forty-two percent of advisors said concerns about a rise in COVID-19 cases were keeping their staff from returning to the physical office, while 31% worried about their employees’ morale, health and general safety.

Not only that, but many advisors said they were now juggling family obligations that were not a concern before the COVID-19 outbreak and did not prevent them from getting into the office.

Technology RIAs’ New Normal

One in three RIAs reported that that during the pandemic, they have upgraded their technology to facilitate team and client engagement. Seven in 10 have increased the frequency of their client communications, with nine in 10 considering the quality of these interactions as good as, if not better than, they were before the pandemic.

Eighty-four percent of RIAs said they now regularly engaged their clients through videoconferencing.

TD Ameritrade said that 60% of advisors were conducting client video conferences before the onset of the pandemic in the U.S., while some 40% ramped up on these tools in response to COVID-19.

Personalized videos and secure texting are also popular client-facing applications now favored by RIAs.

Looking Ahead 

Forty-one percent of advisors surveyed reported that they had already invested more than they planned on technology for 2020, but see these expenditures as vital to how they do business going forward.

Ninety-one percent said their use of virtual meeting and virtual chat tools would remain at a high level once social distancing restrictions were eased.

Aside from technology, advisors have put the brakes on other areas for now. They are spending less than anticipated in areas such as marketing and professional development budgets. And 66% said they were not hiring at present.

And although 42% of advisors said they expected other firms to pick up the pace on mergers and acquisitions, only 36% said they were considering some kind of transaction for themselves in the near future.

“The entrepreneurial spirit of RIAs is what enables them to be flexible and find technology solutions that can bridge both physical and relational gaps, bringing them closer to their clients,” Oligino said.

“It’s exciting to watch this industry of innovators rise to the challenges brought forth by the coronavirus pandemic, knowing that advisors are using this time to connect with clients so they can be confident in their investing strategy and approach for the long term.”

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