2020 RIA Sentiment Survey Mid-Year Update
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TD Ameritrade Institutional
2020 RIA Sentiment Survey Mid-Year Update
August 2020
This material is designed for an investment professional audience, primarily Registered Investment Advisors (RIAs).
TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-
Dominion Bank. ©2020 TD Ameritrade IP Company, Inc.
Executive Summary Covid-19 may have dampened near-term outlooks, but RIAs remain optimistic about the future. ▪ Advisors are twice as optimistic about the prospects for the economy and stock market in 2021, compared to the rest of this year. ▪ They are watching headlines about U.S. economy, presidential election and corporate earnings for their impact on client portfolios. 2020 has brought many positives for RIAs: new clients, higher AUMs, increased revenue. ▪ Since the pandemic, 58% of RIAs have new clients, nearly 6% more on average, and 40% report increases in both AUM and revenues. ▪ Though 60% have returned to the office, it’s not business as usual: more than a third have implemented a split or remote schedules. ▪ Concerns about a resurgence in the number Covid-19 cases is the #1 issue keeping staff from coming back in the office.
Executive Summary
Technology and client communications have gotten a boost.
▪ RIAs have spent more this year on tech than they originally anticipated, with 33% of firms doing tech upgrades because of Covid-19.
▪ More than two-thirds have increased the frequency of client communications since the beginning of the pandemic.
▪ Advisors are relying heavily on video-conferencing to stay connected with clients during the pandemic, nearly 40 percent of firms started
using these tools because of Covid-19.
▪ Ninety-one percent of RIAs expect their usage of virtual meeting tools to continue at a high level when social distancing restrictions ease.
RIAs have adjusted spending as they continue to grow.
• Advisors are spending less on marketing, professional development and M&A than expected at the top of the year.
• Roughly a third are hiring advisors right now, but 66% are holding off on active recruiting.
• Nearly four in 10 are planning some type of M&A transaction for the coming year.
• Though 73% of advisors say their M&A appetite remains unchanged since the pandemic, 40% expect an uptick in deals this year.
Methodology
▪ Results for the TD Ameritrade Institutional 2020 RIA Sentiment Survey Mid-Year Update are based on a nine-minute email survey,
conducted by True North Market Insights, on behalf of TD Ameritrade Institutional, a division of TD Ameritrade, Inc., between July 14
through July 29, 2020.
▪ 158 independent registered investment advisors (RIAs) with an average of $234 million in assets under management participated in this
study. Participants, both clients of TD Ameritrade Institutional and non-clients, were asked to share their views on the economy, their
outlook for their firms and the RIIA market overall. The margin of error is +/- 6%.
▪ TD Ameritrade Institutional was identified as the sponsor of the study. TD Ameritrade donated $10, in aggregate, for each complete to Feed
America.
▪ True North and TD Ameritrade are separate and not affiliated and not responsible for each other’s services or policies.
Investing and Economic Outlook
Advisors are optimistic in their 2021 economic outlook,
less so for the remainder of this year
RIA Economic Outlook through the End of 2020 and 2021
Global Economy U.S. Economy
2% 3% 2%
5% Very Optimistic 6%
24% 18% Optimistic 16%
17% 22%
36%
Somewhat Optimistic
18%
63% 65%
26%
43% Neutral 14%
37%
Somewhat Pessimistic
30% 30%
18% 18%
17% 11% 13%
Pessimistic 18%
3% 7% Very Pessimistic 1% 5%
2020 2021 2020 2021
Base: total n=158
Q1. For each of the following, please choose the response that best describe your outlook through the end of 2020.
Q2. For each of the following, please choose the response that best describe your outlook for 2021.RIAs are overwhelmingly bullish on stocks in 2021
U.S. Stock Market Performance Outlook
Increase
25%
62%
30%
Remain the Same
13%
32%
Decrease
10%
I don’t know 13% 15%
Through the 2nd half of 2020 In 2021
Base: total n=158
Q3. Please choose the response that best describe your outlook for the performance of the U.S. stock market (S&P) overall. Will the stock market…?They are watching the 3Es for their impact on portfolios:
economy, election and earnings
Headlines That May Impact Clients’ Portfolios
U.S. Economy U.S. Presidential Corporate Earnings Federal Reserve Unemployment Longer-term public
Elections Actions health crisis
Vote
70% 70% 59% 53% 52%
73%
Interest Rates Global Economy China Trade Tensions Geopolitical Tensions Oil Prices None of these
46% 45% 40% 38% 27% 2%
Base: total n=158
Q4. Which of the following headlines are you watching for their potential impact on your clients' portfolios? (Please select all that apply.)Advisors expect Tech and Health Care to outperform this year
Sectors Expected to Outperform the S&P 500 Index in the Second Half of 2020
Information Health Care Financials Telecommunication Consumer Consumer Staples
Technology Services Discretionary
18% 17% 16% 15%
61% 47%
Energy Utilities Real Estate Industrials Materials
6% 4% 2%
13% 10%
Base: total n=158
Q5. Which of the sectors do you expect to outperform the S&P 500 index in the second half of 2020? (Please select up to 3 responses.)Pandemic Impact & Business Sentiment
Firms report increases in clients, AUM and revenue amid Covid-19
Impact of US Coronavirus Pandemic on RIAs
Decreased Remained the Same Increased
43% 40%
58%
35%
35%
38%
22% 25%
4%
Total Number of Clients Firm AUM Firm Revenues
Served by Firm (Last 6 months) (Past 6 months)
Percentage Grown
(Average) 5.75% 8.40% 8.45%
Base: total n=158
Q6. Since the Covid-19 pandemic reached the U.S., please indicate how your business has changed in each of the following areas.
Q7. [IF # OF CLIENTS HAD INCREASED, FIRM AUM HAD INCREASED AND FIRM REVENUE HAD INCREASED]
Q7a. [IF Q6A = 3] By approximately what percentage has your firm’s client base grown? (Please estimate as best you can.)
Q7b. [IF Q6B = 3] By approximately what percentage has your firm’s AUM grown over the past six months? (Please estimate as best you can.)
Q7c. [IF Q6C = 3] By approximately what percentage has your firm’s revenue grown over the past six months? (Please estimate a s best you can.)Most advisors are going back to the office in some form, though
Covid-19 concerns remain
What Does “Back to the Office” Look Like for Your Firm?
Expect to Return Back to the Office Vision Issues Preventing Staff to Return
Split schedules for in-office/ Concerns about a resurgence
We are already back 61% 36% in Covid-19
42%
remote work hrs.
Concerns over staff morale,
health, and safety
31%
Upgraded technology tools 33%
After January 1, 2021 9%
Juggling family obligations 28%
Provide PPE to all staff 28% Not comfortable returning until
a vaccine is developed
22%
September - November 8%
Shorter hours at the Preference for our new /
28% current quality of life
18%
physical office
Not for foreseeable
future
8% Don’t feel safe generally 16%
Reconfigured office space 16%
Legal liability as employers 13%
No plans to re-open Fewer designated
the office
4% 7%
conference rooms Our productivity has
improved working remotely
13%
Back at the office/
No changes/same as before 17% 9%
I don’t know / unsure 10% Never closed
No other issues 11%
Other 20%
Base: total n=158
Q22. How quickly do you expect your firm will return to the office?
Q23. [REDUCE BASE: THOSE WHO HAVE PLANS TO RETURN] What does your firm’s vision of “back to the office” look like? (Please select all that apply.) Other 10%
Q24. What other issues are/were preventing you or your staff from returning to work? (Please select all that apply.)Covid-19 has meant and increase in the quality and quantity of
client communications
Client Communications Since the Covid-19 Pandemic Began
Frequency of client communications 3% 28% 68%
1% I don’t know Decreased Remained the Same Increased
Quality of client interactions 3% 10% 49% 39%
I don’t know Declined Remained the Same Improved
Use of virtual meeting / video chat tools
7% 35% 26% 30%
after social distancing and restrictions are lifted
2% I don’t know
Decrease to pre-Covid-19 levels
Decrease, but remain higher than pre-Covid-19 usage
Remain the Same
Increase
Base: total n=158
Q19. How has the frequency of your client communications changed as a result of the Covid -19 pandemic?
Q20. How has the quality of your client interactions changed as a result of the Covid -19 pandemic?
Q21. How do you expect your use of virtual meeting / video chat tools to change once Covid -19 social distancing and travel restrictions are lifted?RIAs have embraced client video conferences in 2020
Client-Facing Technology Usage in 2020
Secure texting
23%
In response
of ovid-19
Video conferences
with clients
84%
Personalized YouTube
videos channel
19% 15%
Flash briefings
18%
Base: total n=158
Q15. For each of the following activities, indicate whether this is something your firm currently does today, plans to do thi s year or is not doing or considering for this year. (Please select one per row.)Four in 10 RIAs started to do video-conferences with clients
because of Covid-19
When did you begin using the client-facing technology that you use today?
Ranked in order of Using prior to the Started because of
usage by RIAs pandemic Covid-19
Video conferences with clients 60% 39%
Secure texting 81% 19%
Personalized videos 68% 31%
Flash briefings 56% 44%
YouTube channel 85% 15%
Podcasts 74% 26%
AI-enabled applications or devices 89% 11%
Augmented reality or virtual reality tools 20% 80%
Digital assistants for customer service 84% 17%
Base: total n=158
Q15. For each of the following activities, indicate whether this is something your firm currently does today, plans to do thi s year or is not doing or considering for this year. (Please select one per row.)
Q16. [REDUCED BASE: Q15 = THOSE CURRENTLY DO OR PLAN TO DO ACTIVITIES] Please indicate when your firm began each of the acti vities that you are currently or planning to do this year. (Please select one per row.)When the Covid-19 pandemic hit the U.S., RIAs doing client
video conferences at least once a week
RIA usage of video-conferencing with clients in the early days of the pandemic
23%
22%
15% 15%
13%
12%
Several times a At least once a Several times a Once a week Several times a Monthly
day day week month
Base: total n=158
Q18. During the beginning of the Covid-19 pandemic in the U.S., how frequently did your firm use virtual / video-conferencing tools to “meet” with individual
clients face-to-face?Even in a pandemic, Boomers prefer in-person meetings with
their advisors, others prefer email, phone and text
Preferred Form of Communication by Generation Since Pandemic Started
Telephone Email In-person Text/ Instant Video Chat Regular Mail
Message
Gen Z (age 8 - 23) 9% 29% 4% 41% 17%
1997- 2012
--
Millennials (age 24 - 39) 8% 36% 5% 30% 22%
1981-1996
--
Gen Xers (age 40 - 55) 17% 40% 12% 6% 25% 1%
1965-1980
Baby Boomers (age 56 - 74) 23% 23% 32% 1% 21% 1%
1946-1964
Seniors (75 - 92) and older 44% 8% 34% -- 9% 5%
Pre-1945
Base: total n=158
Q17. For each demographic group of clients, please choose ONE of the following to indicate their preferred form of communication with you or the firm since the Covid-19 pandemic began and continuing to today. (Please select one per row.)Set to Grow
RIAs have spent more than expected on tech, but made
cuts in marketing and professional development
Actual Spending Versus Expectations Heading into 2020
Real estate and Professional Client Legal / Back office Client facing
related Outsourcing M&A development New Hires relationships Marketing Compliance technology technology
20% 21%
17%
14%
8% 10%
4% 5% 6%
1%
4% 5% 6%
12%
15% 17% 19%
22% 24% 25%
More than Expected
Less than Expected
Base: Total n=158
Q9. [Reduced based – those answering – base sizes varied by category]. For each of the following, indicate how your firm’s spend ing has changed versus expectations heading into 2020.Right now, roughly two-thirds of RIAs are not hiring
Currently Hiring
Advisors From
Other RIAs
Advisors /
20% brokers from
other channels
15%
Recent college
graduates
11%
8% Mid-career changes
66% 4%
Ex-military
Not actively recruiting
3% Don’t know
Base n- 158
Q8. Are you currently hiring any of the following? (Please select all that apply.)Thirty-six percent of firms are considering some kind of
M&A deal for the coming year
M&A Strategies Considered for 2021
Don’t Know Not Likely Neutral Likely
5% 4%
10% 10%
27%
20%
84% 85%
53%
1% 1% 1%
Acquiring another firm Selling an equity stake to an outside party Selling to another firm
Base: Total n=158
Q10-Q12. How likely are you to consider each of the following M&A strategies?RIAs expect a rise in M&A deals for the remainder of 2020
RIA Outlook on Mergers and Acquisitions
Change in My Appetite for M&A as a Result of Covid-19 Outlook for Pace of M&A in the RIA for the 2nd Half of 2020
16% 42%
73% 37%
6% 8%
Base: Total n=158
Q13. [BASE: ALL] How has your appetite for M&A changed as a result of Covid -19? Has it….
Q14. [BASE: ALL] What is your outlook for the pace of M&A in the RIA industry for the second half of 2020?Demographics
Survey Demographics
Total Total
Male 82% Gen Z 1%
Gender
Female 14% Millennials 6%
Owner, President, CEO, Partner,
74% Gen X 41%
Principal Age
Vice President 4%
Baby Boomers 50%
Financial Advisor, Investment Manager, Seniors 3%
3%
Title Portfolio Manager
Average Age 56
Registered Investment Advisor (RIA),
13% Caucasian (non-Hispanic) 87%
Investment Advisor
Chief Investment Officer 4% African American (non-Hispanic) 2%
CFP/Financial Planner 3% Ethnicity Latino or Hispanic 2%
Assets Under $230M 48% Asian/Pacific Islander 1%
Under $230M+ 52% Other 3%
Management
Median AUM $234M
(AUM)About TD Ameritrade Institutional About TD Ameritrade Institutional TD Ameritrade Institutional empowers more than 7,000 independent registered investment advisors to transform the lives of their clients. It provides powerful technology and resources that help simplify running a business and let advisors spend more time doing what matters most — serving their clients. Through meaningful innovation, steadfast advocacy and unwavering service, TD Ameritrade Institutional supports RIAs as they build businesses that positively impact their clients and communities. TD Ameritrade Institutional is a division of TD Ameritrade, Inc., member FINRA/SIPC, a brokerage subsidiary of TD Ameritrade Holding Corp. About TD Ameritrade Holding Corporation TD Ameritrade provides investing services and education to approximately 13 million client accounts totaling approximately $1.5 trillion in assets, and custodial services to more than 7,000 registered investment advisors. We are a leader in U.S. retail trading, executing more than 3 million daily average revenue trades per day for our clients, one-third of which come from mobile devices. We have a proud history of innovation, dating back to our start in 1975, and today our team of nearly 10,000-strong is committed to carrying it forward. Together, we are leveraging the latest in cutting edge technologies and one-on-one client care to transform lives, and investing, for the better. Learn more by visiting TD Ameritrade’s newsroom at www.amtd.com or read our stories at Fresh Accounts.
This material is designed for an investment professional audience, primarily Registered Investment Advisors (RIAs). TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned b y TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. ©2020 TD Ameritrade IP Company, Inc. BI# 1398113
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