Most US-based financial advisors expect to register double-digit revenue growth this year, demonstrating a high level of optimism in the industry, according to the Financial Professional Outlook quarterly survey by Russell Investments. However, advisors might be spending too little time with "top-tier" clients, and are concerned that clients are underfunding their retirement accounts.

Of the around 800 advisors surveyed, 31 per cent are predicting revenue growth of 10-14 per cent this year, and a further 44 per cent expect to see growth of 15 per cent or over.

There was renewed faith in the capital markets, with 86 per cent of advisors saying they were optimistic about them, compared to 59 per cent at the end of last year.

Reflecting this, advisors also said their clients were becoming less wary of the markets, with 36 per cent of advisors stating their clients were optimistic in this area. This compares to only 7 per cent of advisors who gave that answer in December 2010.

Confidence in business activity also rose among advisors, with many believing new client acquisitions will be a key driver of growth this year. Adding to this, advisors expect increased revenue generation from existing clients and – coinciding with capital market confidence – asset appreciation.

However, Kevin Bishopp, director of practice management for Russell’s private client services business, cautioned against relying on client acquisitions as a primary driver of growth. He recommended focusing efforts on producing results for current clients, which can result in referrals.

“[It] is important to recognize that the best advisors obtain new clients from inbound referrals, not marketing or prospecting efforts,” said Bishopp.

The survey also found that nearly one quarter of advisors do not segment their client base at all. Among those that do segment their clients, assets under management was the most popular basis on which to do so, followed by revenue.

Meanwhile, advisors are spending around 50 per cent of their time with their “top-tier” clients, while these clients tend to generate around 70-80 per cent of an advisory firm’s revenue, says Russell Investments.

“We find that a majority of advisors’ top clients are underserved in relation to the revenue they generate. As such, revenue should be a central tenet of client segmentation,” said Bishopp.

Other findings of the survey included that 58 per cent of advisors are most concerned about clients underfunding their retirement accounts, in terms of obstacles to reaching long-term financial goals. The low-return environment registered second as the most pressing obstacle.

Clients, on the other hand, believe their own risk averseness as well as low returns are the main impediments to reaching their financial objectives, according to the survey.