(city wire usa) More RIAs plan to outsource investment management this year in comparison to 2018, according to a TD Ameritrade survey.
The 2019 RIA Sentiment survey revealed that 19% of RIAs said they would outsource investment management to a third-party manager in 2019, up from 10% who said they would outsource investment in 2018.
About 14% of the 302 RIAs surveyed said they would outsource to an investment manager, an 8% increase from the 6% who voted for the option in the 2018 survey.
Further, 4% said in the latest survey they expect to use a Tamp and 1% opted for using a robo advisor.
Advisors are looking for more time to focus on business development and wealth planning for their clients, so firms are gravitating toward outsourcing investment management, according to Vanessa Oligino, director of business performance solutions at TD Ameritrade Institutional.
‘Most advisors will begin to outsource not all of the investment management, but portions of it, while keeping the part that they think is more suited to their technical expertise,’ Oligino said. ‘This is because in most cases it is more cost-efficient to outsource investment management and that frees up their time to do more business development and focus on the firm’s growth strategy.’
Another reason more RIAs are gravitating towards outsourced money management is because of the proliferation of new asset classes and the time it may take for advisors to get up to speed on them while balancing the planning side of their business.
‘When you get into alternatives and when you get into asset classes that have low correlation to traditional stocks and bonds, you definitely need a particular type of expertise and you need to go find people who are capable of doing that due diligence,’ Patrick Sweeny, principal and co-founder of Glastonbury, Connecticut-based RIA Symmetry Partners.
‘For a firm like ours for example, we are pretty much a broadly diversified stock and bonds shop, and we rely heavily on asset managers like AQR and JP Morgan for exposure to alternative spaces.’
In terms of what investment trends clients are asking about, the survey said that 55% of RIAs have clients who are interested in socially responsible or ESG investments, while 48% have clients who have shown interest in pot or cannabis related stocks.
