Fielded in the late fall of 2017, the survey found RIAs focused on the tax reforms that were being negotiated at the time and were subsequently passed before Congress recessed for the winter holidays.
“When we fielded this … advisors were probably getting a lot of calls from clients trying to understand what tax reform means,” said Oligino.
The RIAs surveyed displayed a strong preference for ETFs, with more than half of respondents answering that they now use ETFs more than mutual funds or individual stocks. Most of the assets being invested in ETFs are coming from cash, according to the respondents. But 27 percent said that they are investing assets generated from the sale of mutual funds. Just 9 percent of the respondents said that the sale of individual securities would fund ETF purchases.
According to the respondents, construction of the underlying index was the most important factor in choosing an ETF, followed by performance and cost. RIAs do not appear to buy or switch between ETFs based on sponsors; rather, they report being guided by their asset allocation strategies or lower costs.
“We’ve seen a huge growth in ETF use both on our platform and in the sentiment surveys,” said Oligino. “A lot of that is because they’re an easier vehicle to use, they’re lower cost, and they’re liquid.”
For the report, TD Ameritrade surveyed 300 RIAs overseeing an average of $161 million in client assets between Nov. 27 and Dec. 7, 2017.