Investment advisor firms are expecting higher revenues this year

Industry association survey also reveals higher use of alternative investments

Investment advisor firms are expecting higher revenues this year
Steve Randall

Advisors are hopeful that 2019 will be a year of increased revenue according to a new survey.

ADISA, the largest trade association for the retail alternative investment space in the US surveyed due diligence officers from dozens of independent broker-dealer (IBD) and registered investment advisor (RIA) firms in the financial industry.

It found that 94% of due diligence officers expect revenues to be higher in 2019 with almost a third of them predicting growth of at least 20%.

Respondents also said they are expecting their firms to increase their use of alternative investments this year.

By product type:

  • Approximately half of respondents predict that REIT preferred stock offerings will have an increase in sales.
  • Roughly 40% of respondents predict more than a 10% increase in tax-advantaged fund sales.
  • Approximately 20% of respondents predict an increase of less than 10% in opportunity zone fund sales, and another 20% predict growth of more than 10%.
  • Private equity and private debt sales are projected to increase approximately 10%.
  • Closed-end funds and interval funds are expected to have a moderate increase in sales, projected at approximately 9%.
  • Oil and gas, non-traded REITs, infrastructure, hedge funds and asset lending/leasing programs are all expected to remain relatively flat.

"The results of ADISA's inaugural market prediction survey are compelling and provide beneficial insight as well as a statistical representation of what alternative investment products are held by independent broker-dealer and RIA firms," said ADISA Executive Director and CEO John Harrison.

Current popularity of alternatives

Using data on the current holdings of firms, the survey also ranked the popularity of alternatives with Real estate – Reg D programs the most popular, with respondents holding an average of approximately eight programs on their platforms. Section 1031 exchange offerings were the second most common, with private equity – Reg D and closed-end/interval funds succeeding them.