CORRECTING and REPLACING With Economic Optimism at a Five-Year High, RIAs Get Set to Grow in 2014

Link in fourth graph of "Reaching New Clients" section of release dated January 30, 2014, should read: http://www.amtd.com/files/doc_news/research/AdvisorIndex_survey_Q22014.pdf (sted http://www.amtd.com/newsroom/research.cfm).

The corrected release reads:

WITH ECONOMIC OPTIMISM AT A FIVE-YEAR HIGH, RIAS GET SET TO GROW IN 2014

New TD Ameritrade Institutional Advisor Index Study finds regulatory issues top list of concerns, while client referrals and technology offer best growth opportunities

Independent registered investment advisors (“RIAs”), buoyed by strong market and client growth last year, say it’s full steam ahead for their businesses and the economy in 2014, according to new findings from the latest TD Ameritrade Institutional Advisor Index Survey.

After a year of robust market growth, independent advisors are feeling good. RIAs report revenues were up roughly 20 percent at the end of 2013, and assets under management averaged 20 percent growth as well. More than two thirds of advisors said their client base increased by an average of 13 percent.

They are also more optimistic about the U.S. economy than they have been in five years, fueling confidence about their own businesses. Bolstered by referral networks and technology investments, three-fourths of RIAs predict firm assets under management will grow at least as fast as 2013, with 30 percent expecting growth at a 31 percent faster clip, on average.

“After another year of double-digit growth on all fronts, advisors have renewed energy and enthusiasm about their prospects,” said Tom Nally, president of TD Ameritrade Institutional. “They’re building on last year’s momentum and serving clients better by making strategic investments in their people and their technology.”

Just over half of new client assets came to RIAs from full-commission brokerage firms in 2013. More personalized service and competitive fee-structure is the number one reason clients chose to move to an independent RIA, according to survey respondents.

Investing Outlook

Heading into 2014, 38 percent of RIAs expect the stock market to continue its upward trajectory and 46 percent say it will remain the same. But advisors are less enthused about the historically low-yielding bond market. More than half say the bond market should stay the course over the next three months, though 41 percent believe bond prices will start to fall in a period when interest rates are widely expected to begin rising.

RIAs anticipate the total rate of return on client investments will average eight percent for the first half of 2014. And they are making slight adjustments to client portfolios to achieve this, moving toward equities at the expense of fixed income. Equities are now 54 percent of client portfolios, compared with 48 percent last year, while fixed-income allocations now average 23 percent of client portfolios, down from 27 percent from last year.

Moreover, 42 percent of advisors are searching outside of the bond market for higher yields, investing in asset classes such as international stocks, real estate and energy. Seventy percent of RIAs continue to use exchange-traded funds (ETFs), and 40 percent will increase their usage of these low-cost vehicles over the next 12 months.

Advisors Facing Regulatory Issues

Advisors report their top business concerns are regulatory changes, firm profitability and growth. A full 71 percent of RIAs claim that the potential burdens and costs they will have to manage as a result of the changing regulatory landscape are the biggest competitive threat, followed by growing numbers of investors opting for do-it-yourself investing (33 percent) and broker-dealers offering fee-based investment management services (32 percent).

Coping with regulatory change is not simply a business concern for RIAs, it’s potentially one of the biggest obstacles to firm growth in 2014. As in 2013, advisors also feel challenged by handling increased compliance requirements and dealing with an aging client base.

“The biggest hurdles to advisor growth don’t disappear overnight – addressing increased compliance requirements, regulatory changes and an aging client base takes time to work through successfully,” said Nally.

Gearing Up For Growth

RIAs are moving forward with firm-wide strategic initiatives that were in place in 2013. They remain committed to utilizing technology to increase scale, systematizing client service and delivery, and training and developing staff. Implementing these plans will require some infrastructure upgrades, so 66 percent are committing more capital to technology and more than a quarter plan to hire junior advisors to accommodate growth. Augmenting compliance (23 percent) rounds out the top projects this year on advisors’ to-do lists.

The technology upgrades being considered most by advisors are related to:

• Performance reporting
• Portfolio accounting
• Customer relationship management (CRM)
• Document management
• Financial planning

Reaching New Clients

RIAs are putting more muscle behind their marketing in 2014. Forty percent will increase spending on marketing and business development in the first half of the year, while 58 percent will maintain their current budget. Efforts will likely be centered on increasing referrals from clients and so-called centers of influence, such as attorneys and accountants, which advisors indicate are the top two tactics that drive growth.

With clients averaging 55 years of age or older, RIAs recognize that growth will come from the next generation of investors. But most are struggling with the right marketing approach and are seeking turnkey solutions to help them do so. Fifty six percent are open to a program to help hire interns. Roughly 60 percent say they would like their own online financial advice service to existing clients, and 65 percent are open to having this type of offering to help attract new clients.

“RIAs continue to be fastest growing wealth management channel, and we want to make sure they have the right tools to maximize every opportunity to grow in every market cycle,“ said Nally. “We’re listening to advisors and helping them in all the areas where they need and want support.”

For more information about the TD Ameritrade Institutional Advisor Index Survey, visit http://www.amtd.com/files/doc_news/research/AdvisorIndex_survey_Q22014.pdf to download the complete survey findings.

Survey Methodology

The results of TD Ameritrade Institutional Advisor Index Survey are based on a survey conducted by Maritz, Inc. on behalf of TD Ameritrade Institutional, a division of TD Ameritrade, Inc. Three-hundred and two registered investment advisors (“RIAs”) with firm assets under management averaging $191 million participated in a telephone survey from January 6 – January 17, 2014. Independent RIAs who custody with TD Ameritrade Institutional, as well as other independent RIAs from across the country were asked to share their views on the economic outlook for their firms and the advisor market in general. The margin of error in this survey is ±5.6%. This means that in just over one case out of 20, survey results based on 302 respondents will differ by no more than 5.6 percentage points in either direction from what would have been obtained by seeking the opinions of all eligible RIAs. Maritz, Inc. and TD Ameritrade, Inc. are separate, unaffiliated companies and are not responsible for each other's products and services.

About Maritz

St. Louis-based Maritz is a sales and marketing services company, which helps companies achieve their full potential through understanding, enabling, and motivating employees, channel partners, and customers. Maritz provides market and customer research, communications, learning solutions, incentive initiatives, rewards and recognition, effective meeting, event and incentive travel management services, and customer loyalty programs. For more information, visit www.maritz.com or contact us at 1-877-4MARITZ.

TD Ameritrade and Orion Advisor Services, LLC are separate and unaffiliated companies, and are not responsible for each other’s policies or services.

About TD Ameritrade Institutional

TD Ameritrade Institutional1 is a leading provider of comprehensive brokerage and custody services to more than 4,500 fee-based, independent registered investment advisors and their clients. Our advanced technology platform, coupled with personal support from our dedicated service teams, allows advisors to run their practices more efficiently and optimize time with clients.

About TD Ameritrade Holding Corporation

Millions of investors and independent investment advisors have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education to help make investing and trading easier. Our clients want to take control and we help them decide how, whether online, over the phone, in a branch or with an independent investment advisor. We’ve been bringing Wall Street to Main Street for more than 36 years. An official sponsor of the 2014 U.S. Olympic Team, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade’s newsroom or www.amtd.com for more information.

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1TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.

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