Data & Research February 5, 2009

Many RIAs Report Firm Growth

In the last six months, 60% of surveyed independent registered investment advisers (RIAs) reported an increase in clients, many of which are coming from broker/dealers and wirehouses.

Reported by

Ellie Behling

Even if they are not growing their client base, the overwhelming majority of RIAs are not losing clients. The survey by TD AMERITRADE Institutional also found 90% of RIAs reported increased growth or no change in the number of new clients.

Client growth rates among firms varied, TD AMERITRADE said. Of the respondents who reported growth in client numbers in the past six months, two-thirds have seen growth rates up to 10% and another third reported growth rates exceeding 10%.

According to the survey, one-half of new assets at RIAs are coming from wirehouses and broker/dealers. When asked about assets leaving their firm, nearly half of RIAs reported losing assets to known sources including other RIAs (20%) and banks (15%). Few respondents reported losing assets to either broker/dealers (8%) or wirehouses (3%), according to the results.

“This survey shows RIA firms have solidified themselves as the model of the future in this difficult market,” said Tom Bradley, president of TD AMERITRADE Institutional, in a press release of the survey results. “Advisers are moving full-speed ahead as the independent model gains in popularity with clients.”

Future Concerns

Even though many RIAs are seeing business growth, it is also the top concern for them. According to the survey, when factoring in the current economic climate, RIAs reported the top five concerns for their practice over the next twelve months are: business growth (26%), the macro-economic environment (24%), managing risk (18%), regulatory changes (9%), and marketing and operational efficiency, which tied at 6%.

Respondents are maintaining their current business strategy (43%) and looking to increase revenues (42%). In order to increase revenues, respondents reported they will increase their marketing efforts (46%) and expand into new markets (32%).

According to the survey, one in 10 firms is looking to reduce expenses. Reducing the owner/principal’s compensation (42%) and outsourcing back-office activities (22%) topped the list of ways these RIA firms will look to cut costs in the next 12 months.

The results are based on a survey of 506 RIAs conducted by Maritz, Inc. on behalf of TD AMERITRADE Institutional.