The long-running bull market, continued business growth and promising new innovations have RIAs feeling optimistic about their prospects in 2018, according to a recent survey.
In the 2018 RIA Sentiment Survey released Tuesday by Jersey City, N.J.-based TD Ameritrade Institutional, advisors were confident about growth in the global economies and financial markets, while recognizing that their clients were still concerned about retirement, taxes and estate planning. More than three-quarters of the advisors surveyed, 78 percent, said that they expect their AUM to grow in 2018, and nearly half said that they expect their assets to grow faster this year than they did in 2017.
“Advisors always seem to be very optimistic, which is a great thing,” said Vanessa Oligino, TD Ameritrade Institutional director for business performance solutions. “As small business owners, they need to be optimistic and thinking about the future.”
In the latter half of 2017, respondent revenues grew by an average of 15 percent and AUM grew by an average of 16 percent, according to TD Ameritrade. Nearly two-thirds of the advisors surveyed, 65 percent, say that they added new clients in 2017 for an average growth rate of 16 percent.
Through the last half of 2017, RIAs gained more new clients from traditional brokerages than from any other source, according to the survey. Investors moving from national full-service broker-dealers made up one-third of RIAs’ new clients in 2017.
Seven in 10 of surveyed advisors felt confident about the U.S. and global economies, and half feel confident that equity markets will continue their momentum from 2017, with financials, materials, industrials and technology most likely to lead the growth through 2018. Given the rising interest-rate environment, the respondents were pessimistic on fixed-income markets.
RIAs are ready to put their optimism into action this year. In 2018, the respondents said they would be most likely to invest in marketing and hiring for their firms, with goals to gain more assets through marketing and to enhance the client experience through technologies like CRM tools, digital signatures and document management software.
Though the administration of President Donald Trump has announced intentions to roll back many regulations, and the full enforcement of the Department of Labor’s fiduciary rule has been delayed until at least the middle of 2019, the RIA respondents still believed that regulations are their biggest potential roadblock moving into this year.
“Regulation is something that’s always there when we survey advisors,” said Oligino. “They’re always looking to see what new guidance or regulations the SEC or Finra are alerting them too, there’s always a lot that the regulators are putting out, but not a lot that gets implemented. Advisors are worried because these are always issues, they’re in the news.”
Respondents also said that a lack of consumer awareness of what differentiates the RIA channel from other industry segments creates headwinds to future growth. Only 1 percent of survey participants felt threatened by roboadvisors.