Developing the next generation of talent and worries over cybersecurity are the top priorities for RIAs, according to a just-released Investment Adviser Association and Cerulli Associates poll.
In the premier 2017 Executive Outlook Survey – the first in an annual series of surveys measuring and tracking business sentiment among IAA member executives – 63% of firms polled said they plan to grow their workforces over the next 12 months. More than half (56%) plan to grow by up to 10%, while 7% said they plan to increase their staffs by more than 10%.
The overall outlook for 2017 is positive, with both assets under management and headcount expected to increase, the study notes. However, "fee pressure, costs in technology (both cyber and operational), and compliance costs are rising concerns."
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The poll surveyed 6,000 U.S. financial advisors across asset manager and wealth channels.
Cybersecurity and the changing regulatory environment topped worries for these executives, with 97% citing cybersecurity and 93% flagging regulatory pressures. Other areas of significant concern included the possibility of a significant market crisis (83%) and fee compression (62%).
With respect to cybersecurity and technology improvements, the RIAs polled indicated "a need to catch up rather than get ahead," with 56% stating cybersecurity improvement as their No. 1 technology investment in the next year.
Near-term investments in technology are going to be used by firms to address cybersecurity concerns (89%), to improve data management and analytics (76%), and to implement regulatory/reporting requirements (76%), the poll found.
Ninety-eight percent of the executives identified talent development as an important initiative for ensuring firm profitability – with 58% calling it "very important" and another 40% calling it "moderately important."
More than 50% of firms said that developing the next generation of talent is very important with 38% stating that succession planning is a top priority over the next year. However, only 31% of firms plan to increase their hiring, training and retention budgets.
Cerulli believes an uptick in acquisitions and succession planning will unfold during the next two years.
Executives were split on the Department of Labor's fiduciary rule, which is in flux, with more than a third – 38%– calling it the single biggest opportunity for increasing business over the next 12 months. But 21% cited the rule as a significant threat to business.
Similarly, 31% saw digital advice platforms as a threat, while 17% saw them as an opportunity.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
