Independent advisors are optimistic about their own businesses and the economy for 2014, according to the latest TD Ameritrade Institutional Advisor Index Survey.
The survey found that, on average, RIAs said their revenue was up 18 percent in 2013 while assets under management grew 20 percent.
Three-fourths of RIAs predicted that their assets under management would grow at least as fast as they did in 2013, with a third of advisors expecting growth at about 31 percent, on average.
Over half of new client assets came to independent advisors from full-commission brokerage firms in 2013, a move fueled by the personal service and competitive pricing offered by RIAs, says TD Ameritrade.
Thirty-eight percent of RIAs expect stock prices to continue rising in 2014, but nearly half said they see the market leveling out and ending little changed by year-end. With regard to the bond market, 41 percent believe bond prices will start to fall in a period when interest rates are expected to rise.
In keeping with that view, TD Ameritrade found that RIAs are moving assets into equities and out of fixed-income investments. Equities were 54 percent of client portfolios in early January, when the survey was conducted, compared with 48 percent a year ago, and fixed-income averaged 23 percent of portfolios, down from 27 percent.
In addition, 42 percent of advisors are searching outside of the bond market for higher yields, investing in asset classes such as international stocks, real estate and energy. Seventy percent of RIAs continue to use exchange-traded funds, and 37 percent said they would increase their usage of these vehicles over the next 12 months.
Top business concerns facing RIAs are regulatory changes, firm profitability and growth, according to the survey. Seventy one percent claimed the potential burdens and costs they would face from changing regulations are the biggest competitive challenges, followed by the numbers of investors choosing to invest on their own (33 percent) and broker-dealers offering fee-based management services (32 percent).
TD also found that 68 percent of advisors said the average age of their current clients is 55 or older. In order to reach new clients, 40 percent of respondents said they would increase spending on marketing and business development in the first half of the year. Fifty-six percent of RIAs said they would be interested in a turnkey program to help hire interns. And nearly two-thirds would consider offering web-based advice services to attract new clients.
Conducted by Maritz Inc. on behalf of TD Ameritrade Institutional, 302 independent registered investment advisors participated in a telephone survey January 6 through January 17, 2014.