Financial planners and advisers hope that by boosting marketing they can expand their practices this year, according to a survey released by TD Ameritrade Institutional.
Advisers have won clients dissatisfied with advisers at Wall Street firms, but one adviser is skeptical that marketing alone can reap assets.
Paul Byron Hill, president and founder of Professional Financial Strategies, said advisers need a disciplined planning process to grow their business. The Pittsford, N.Y., based independent wealth manager said that by managing his practice this way it paid dividends during the downturn.
“I was careful about how I took clients and how I managed their portfolios,” he said. “As far as I’m concerned, this has been wonderful for us.”
Hill said that he took a very diversified approach to investing clients’ assets, and rebalances their portfolios regularly. That strategy helped Professional Financial Strategies capture returns that eluded other advisers during the market downturn. The firm has about $100 million in assets under management, up from $80 million at the end of 2008. Before the downturn, the firm oversaw slightly more than $70 million in assets.
Registered investment advisers surveyed by TD Ameritrade Institutional, however, say they are focused on marketing and business growth to help them get through challenging times.
Sixty-four percent of advisers have increased spending on marketing, up from 53% from September when the survey was last conducted. The survey sampled 507 registered investment advisers by phone in December.
TD Ameritrade said that the top source of new clients continues to be dissatisfied investors who previously got advice from large broker/dealers and major Wall Street firms. Indeed, despite not having well-known company brands, 60% of RIAs say they have added new clients since the last time the survey was done.
Dissatisfaction with the brokerage channel might give an RIA firm a short-term boost in clients, but service will maintain the working relationship, according to the survey. Citing a recent study by CEG Worldwide, a coaching and consulting firm in San Martin, Calif., TD Ameritrade Institutional said when affluent clients drop advisers, 87% of the time the decision stems from a poor service relationship. Only 13% of the time is it because of poor investment performance.
Hill said that he avoids trying to sign up new clients by selling them on investment performance. Markets change, he said, and when a client’s portfolio does not perform well, that individual will lose trust in the adviser.
"We’re not trying to hit home runs here,” Hill said. “We give a good experience to clients. That is what most of them want.”