A Speedier Rate of Growth in AUM Is Anticipated

Advisers are gearing up for growth with technology investments, customer service and training, according to a survey by TD Ameritrade.
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An overwhelming majority (97%) of advisers surveyed reported that their total number of clients increased or remained steady over the past six months. Nearly nine in 10 registered investment advisers (RIAs) said they anticipate a faster growth rate in assets under management (AUM) in 2013, TD Ameritrade Institutional’s Advisor Index Survey found.

This is a reasonable outlook, Danny Sarch, president of Leitner Sarch Consultants, told PLANADVISER. “If you are an existing adviser—from modestly skilled to the most talented—and you plan on being in this business for the next 10 years, this is as good as it gets.”

It is harder than ever to train new advisers, Sarch said, “and it’s harder to get people to come into the industry. People are retiring and not enough advisers are being trained to replace them.”

Advisers said they would implement a variety of strategic planning initiatives to prepare for their firm’s expansion over the next six months. Conducting internal strategic planning discussions (67%), using benchmarking studies and whitepapers for guidance (37%) and conducting workshops sponsored by custodians or other vendors (20%) top the list of tactics advisers are planning.

RIAs find themselves in an interesting paradigm: a challenging business environment combined with an unprecedented opportunity, according to Jim Dario, managing director of product management at TD Ameritrade Institutional.

“Many leading firms have seized the opportunity and created dynamic, fast-growing and profitable enterprises by identifying the cost drivers in their businesses,” Dario said. “RIAs are able to build long-term value for their firm by leveraging technology that delivers consistent client service and scales with firm growth.”

Advisers surveyed said deploying technology to increase scale (63%), systematizing client service and delivery (58%), and training and developing staff skills (58%) are the top strategic initiatives for growth over the next six months.

Investing in technology (63%) is the top infrastructure investment advisers plan to make over the next six months to accommodate business growth. Advisers also plan to invest in customer relationship management tools (33%), performance reporting tools (31%) and mobile devices (28%).


“Adopting new technologies alone will not create office efficiencies, improve client service or provide a pathway to more profitable growth,” Dario said. “These solutions will need to be integrated within a firm’s workflows and adopted by staff members as part of their day-to-day responsibilities to ensure consistency and effective impact on business processes.”

Advisers reported a majority of growth opportunities come from referrals (86%), including client referrals (56%), center-of-influence referrals (17%) and third-party referrals (11%). To attract new clients, RIAs are considering new niche clients (34%), adding new markets (26%) and adding new expertise (26%).

It is a much more competitive world in terms of the assets, Sarch said.

“Not only are top firms proactive in developing referrals, they are also using technology to systematize the referral process through the use of CRM dashboards and business analytics tools,” Dario said. “By knowing precisely where each referral opportunity is in the sales pipeline, advisers can nurture each prospect step-by-step with a timely and thoughtful communications approach.”

Increased compliance requirements (57%), regulatory changes (56%) and an aging client base (56%) were identified as potential headwinds to long-term growth. In response, 40% of advisers plan on increasing spending on marketing and business development in the next six months to bolster potential growth. Many advisers (71%) indicated they were not considering merger-and-acquisition (M&A) activities as part of their growth strategy. Of the few RIA advisers that are considering M&As over the next six months, acquiring another firm (14%) or adding new partners or owners (13%) to their firm were identified as top strategies.

The Institutional Advisory Index surveyed 50 independent RIAs.

The TD Ameritrade Institutional Advisor Index Survey can be downloaded from the firm’s website.