Independent Advisers Feel Good about Future

It’s been a challenging year, but independent registered investment advisers (RIAs) are optimistic, according to a quarterly survey by TD AMERITRADE Institutional.

Polled advisers are upbeat about both their jobs and the U.S. economy. Half of advisers gave top ratings (9 or 10 out of 10) to job satisfaction, up 10% from last quarter. Nearly half of RIAs have an optimistic outlook of the economy for the remainder of this year, up 25% from May, according to the survey.

The survey indicated that RIAs are continuing to pull in clients as investors continue to choose independent advisers over full-commission brokers. Nine in 10 polled RIAs reported total client numbers are up or remained steady over the last six months, similar to the results of the last survey (see “RIAs Say They Continue to Poach from Wirehouses”). More than 60% of RIAs surveyed added clients, 30% saw no change, and less than 10% lost clients.

RIAs who reported growth said 72% of new client assets came from wirehouses and broker/dealers. Dissatisfaction and lack of trust in full-commission brokerages (46%), as well as overall preference for the independent advice model (44%), are top reasons clients chose an RIA, according to the survey.

Time to Reboot

While they might be optimistic, RIAs have been stressed. More than half of RIAs said their quality of life was hurt by the financial downturn, according to the survey commissioned by TD AMERITRADE Institutional, a custodian for independent advisers and division of TD AMERITRADE Holding Corporation (see “Advisers Feel Market Stress” and “Tips for Managing Through the Crisis”). Finances, mental health, and hours worked are areas where advisers felt stretched.

It seems many advisers want to get their personal lives back in order. In the New Year, 42% of polled advisers said they want to spend more time with family and friends, improve their health (31%), enjoy more leisure time (31%), reach a new level in their career (29%), acquire new professional skills (18%), get finances in order (15%), and participate in public service (14%).

As far as business goals, the advisers are focused on business growth (68%), increased client satisfaction (39%), and improved profitability (31%) in the next 12 months.

Looking ahead to 2010, regulation weighs heaviest on the minds of RIAs. Regulatory change (42%) tops the list of business concerns over the next 12 months again, up nearly 25% since last quarter. Other major concerns include the macro-economic environment (35%), profitability (31%), business growth, and managing risk (each 26%), according to TD AMERITRADE.

RIAs cited the following as largest obstacles to meeting business goals next year: personnel issues (33%), insufficient processes and procedures (21%), and poor time management (21%).

Spending Up

RIAs are spending in some areas and holding back in others. The survey found that advisers are making investments in technology (62%), marketing (53%), and client appreciation activities (35%). However, they are cutting other expenses such as travel (62%) and salaries and bonuses (45%).

Seven in 10 advisers surveyed avoided cost-cutting this past quarter. Fifty-three percent made no changes, 28% decreased spending, and 19% increased spending.

Maritz, Inc., surveyed 501 RIAs between August 26 and September 8 on behalf of TD AMERITRADE Institutional.