TD Ameritrade’s top executives opened their national conference for RIAs in San Diego this morning with some good news: Retail investors are back.

Fred Tomczyk, president and CEO of TDA, said that while retail investors are not all the way back, they are increasingly bullish and sentiment is up. TD Ameritrade’s Investor Movement Index, which tracks investor sentiment, was up 1.65 percent in December. And so far in January, flows to equity mutual funds have been positive.

“The reality is, [retail investors] always come back,” because the profits are so great, said Tom Bradley, president of retail distribution. In 2012, the S&P 500 was up 16 percent.

Retail investors, however, will often lag the markets—getting in near the end of a rally—but Bradley believes the lag is just by a bit.

The U.S. economy is improving, Tomczyk said; corporations have strong balance sheets and are flush with cash. And things have settled down in Europe. But things are still fragile, and Washington screw things up, he said.

Pete Dorsey, managing director of institutional sales, said there are still some regulatory issues pending, with the looming fiscal crisis. And many investors are taking a wait-and-see approach.

Tomczyk is concerned, however, about clients invested in long-term bond funds. Advisors need to make sure their clients understand how it works and how bonds are valued when interest rates start to rise. The risk/reward profile of bonds has changed, because of where interest rates are, and most retail investors don't understand the potential risks in a rising rate environment.