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RIAs Optimistic Despite Market Expectations

By Alex Padalka January 14, 2016

RIAs are convinced they can boost assets under management this year even though they expect falling equities and increased volatility, according to a TD Ameritrade survey.

Only two out of five advisors believe U.S. equities will rise in the first half of the year, and 64% are taking preventative measures by going into less volatile products, with the majority preferring to shift out of bonds, shed equities or allocate to cash, according to a survey conducted in November and December of 302 RIAs with an average of $265 million in assets.

Yet almost 80% of respondents said they expected AUM growth in 2016, at an average rate of 17%, according to the survey. Advisors’ projections for 2016 are very optimistic, considering that the 63% of advisors who grew their AUM last year did so by an average of 13%, the survey found.

But RIAs clearly feel the environment is changing. Compliance and regulations have taken a back seat to macroeconomic issues and changing client needs for the first time since 2012, according to the survey.

As far as what keeps them in business, RIAs now see their biggest threat in the projected wealth transfer from Baby Boomers to the next generations, followed by increasing numbers of investors choosing to do their own financial planning, according to the survey.

To address some of these concerns, RIAs are planning to invest in technology – prioritizing cybersecurity and CRM systems – as well as concerted client prospecting, with more than half planning to go after new client niches and about half saying they will invest more in marketing and advertising.

Staffing remains a perennial issue, with almost a third of RIAs planning to take on junior advisors to let senior advisors focus on client relationship development, while more than a quarter plan to hire back-office support staff, according to the survey.

Just 1% of respondents said they are “extremely concerned” about the threat from robo-advisors, although almost no advisors said they were not at all concerned. But 14% said they plan to unveil their own online investment platforms and are also working on robo services, with 85% of that subset planning to start an automated service by the end of the year, the survey found.