A new benchmark study from Security Benefit, a leading player in the US retirement market, provides a comprehensive snapshot of RIA's sentiments on various market-shaping issues in 2024.
The study, drawing on responses from 201 registered investment advisors, offers a detailed analysis of RIA perspectives on client practices, economic outlooks, product diversification, and the impact of the upcoming US presidential election.
The research, conducted in collaboration with Greenwald Research and DPL Financial Partners, revealed RIAs are split on the potential effects of the 2024 election on the investment landscape. While 41 percent of respondents anticipate a neutral impact, 39 percent foresee a negative impact, and 20 percent predict a positive impact.
Despite ongoing market volatility, RIAs maintain a high level of client satisfaction with their investments. A substantial 87 percent of RIAs report that their clients are satisfied or very satisfied with their portfolios, leaving just 13 percent reporting significant concern among clients about a major equity downturn. The study also noted an increase in equity allocations, with 51 percent of RIAs having shifted more assets into equities over the past year.
"An anticipated decline in interest rates coupled with the election in the latter half of the year may keep volatility high, however, RIAs are considering solutions with guarantees to weather this storm of uncertainty and build confidence among clients," Mike Reidy, national sales manager, RIA channel at Security Benefit said in a statement.
The study highlighted a robust trend towards guaranteed income products among RIAs, with over half of the respondents (55 percent) stated they are using or plan to use fixed annuities in the next six months, and 45 percent expressed similar intentions for fixed index annuities.
Nearly one-fourth (23 percent) of RIAs have reportedly increased their use of fixed index annuities over the past year. While 30 percent of RIAs say they don't use FIAs, one-third (34 percent) said they make use of those annuity products at their practices.
Another 25 percent of RIAs in the study have also reported dialing up their exposure to fixed annuities like multi-year guaranteed annuities in the past 12 months, giving them an opportunity to lock in current rates as the question of when the Fed will cut rates lingers on.
Many RIAs also see an opportunity to capture business in cash assets, particularly client dollars parked in bank accounts. Fifty-two percent of RIAs noted that a quarter of their clients have at least $100,000 in a bank savings account. Of these advisors, 82 percent believe they could attract a significant portion of these funds by offering investments with competitive interest rates and guaranteed periods.
Growth strategies for RIAs have remained relatively stable since the pandemic, with referrals being the primary method for attracting new clients, as cited by 52 percent of respondents. Networking and specialized marketing also play significant roles in client acquisition, according to the study.
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