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Survey: COVID-19 Can’t Dim Advisers’ Outlook

Optimistic RIAs Flex in the Face of 2020 Realities, Using Technology to Serve Clients and Keep Firms Focused on the Long-Game

In spite of the COVID-19 pandemic, independent registered investment advisors (RIAs) are hopeful for the better days that lie ahead. According to findings from a new survey conducted for TD Ameritrade Institutional, advisors remain bullish on the future of the economy, the market and their businesses, and in the near-term, they’re focused on helping clients navigate uncertain times.

Though they have a more somber outlook for the end of this year, more than 60% independent RIAs participating in the TD Ameritrade Institutional’s 2020 RIA Sentiment Survey Mid-Year Update are optimistic about the prospects for the U.S. and global economy in 2021. A quarter believe that stocks will increase by year-end, whereas 62% have a bullish stock market outlook for 2021.

As we head into the second half of a year that has already dealt investors significant challenges, RIAs are paying close attention to headlines on the U.S. economy, the presidential election and corporate earnings for their impact on client portfolios. Consistent with their expectations heading into 2020, they believe the Information Technology, Health Care and Financial Sectors will outperform this year.

“The saying, ’Keep calm and carry on’ has served advisors well during these unprecedented times, as they help their clients – and themselves – make sense of, and adapt to, current events that are impacting their long-term goals,” said Vanessa Oligino, managing director of business performance solutions for TD Ameritrade Institutional, a provider of brokerage and custody services to more than 7,000 RIAs. “The results show that investors want financial guidance they can trust, which is why RIAs are growing even as they are having to pivot rapidly and in some cases, rethink large portions of their operations.”

58% of RIAs have continued to onboard new clients during the coronavirus pandemic, with client bases increasing nearly 6% during this time. 43% report AUM increases of 8% on average, and 40% of RIAs have seen revenues increase at a similar rate.

RIAs are Back in the Office, but It Looks Different

As the number of positive coronavirus cases rises across the country, RIAs remain undeterred when it comes to taking care of their clients – though it is not back to “business as usual” for most firms.

More than 60% of RIAs are already back in the office, but COVID-19 concerns and precautionary measures have changed what this looks like for many. 36% of firms are juggling split in-office and remote work schedules to allow for social distancing, and 28% are providing staff with PPE.

And 42% of advisors say concerns about a rise in COVID-19 cases are holding their folks back from returning to the physical office, while an additional 31% worry about their staff morale, health and general safety. And COVID-19 has thrown RIAs another curveball as well: many are now juggling family obligations that, pre-pandemic, were not a concern and did not impact their ability to get into the office.

Technology Holds the Key to Client Communications in the RIA’s New Normal

33% of RIAs report that since the pandemic, they have upgraded their technology to facilitate team and client engagement. Throughout these times, 68% of RIAs have increased the frequency of their client communications, and 88% report that the quality of these interactions is as good as, if not better than, they were pre-pandemic.

Video conferencing has taken off among RIAs this year, with 84% now videoconferencing regularly with clients. Indeed, in the early days of the coronavirus pandemic in the U.S., 64% were doing so at least weekly. Though 60% of advisors doing client video conferences today were doing so before the onset of the pandemic in the U.S., nearly 40% ramped up on these tools in response to COVID-19.

Personalized videos and secure texting are also popular client-facing applications now favored by RIAs.

Looking Ahead to What’s Next

Though four in 10 advisors have already invested more than they planned on technology for 2020, advisors view these expenditures as vital to how they do business going forward. 91% say their use of virtual meeting and virtual chat tools will remain at a high level once social distancing restrictions have eased.

While it’s a full-court press on technology, advisors have put the brakes on other areas for now. They are spending less than anticipated in areas like marketing and professional development budgets. And for the moment, RIAs have eased up on hiring: 66% are not actively recruiting right now.

Advisors hold a similar view of deal-making when it comes to their own firms. Though 42% expect others to pick up the pace on mergers and acquisitions, just 36% are considering some kind of transaction for themselves in the near future.

“The entrepreneurial spirit of RIAs is what enables them to be flexible and find technology solutions that can bridge both physical and relational gaps, bringing them closer to their clients,” said Oligino. “It’s exciting to watch this industry of innovators rise to the challenges brought forth by the coronavirus pandemic, knowing that advisors are using this time to connect with clients so they can be confident in their investing strategy and approach for the long-term.”

Click here to download the TD Ameritrade Institutional 2020 RIA Sentiment Survey Mid-Year Update.

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