Pierce: TD Ameritrade Quietly Builds Recruiting Momentum

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TD Ameritrade Institutional looks like a very appealing option for RIAs. Though this is a firm that everyone seems to be aware of, TD Ameritrade has not always received the kind of mindshare they deserve among RIAs.

TD Ameritrade has had an excellent recruiting and asset-gathering year.  Looking at industry transfer records and recruiter comments, they have big wins from LPL and numerous independent BD firms.  They also have benefitted from a new trend: wirehouse FA’s joining an existing TD Ameritrade firm to limit the transition risk of a start-up and take advantage of a firm that is already structurally sound and at scale. Overall, TD Ameritrade’s RIA business has grown to more than 5,000 RIA firms and more than $300 billion in assets under custody.

This momentum is coming from FAs that want to be entrepreneurs. They want to run their own firm and they appear to be more tech-savvy than most. When they see that independent advisors can keep 100% of the revenue they earn, less operating expenses, they discover new opportunities for growth along with service efficiencies to take care of their clients.

TD Ameritrade Institutional primarily earns its money on trade commissions, margin balances and (eventually) on money market spreads. The TD Ameritrade model is unique among its rivals, though, because it doesn’t charge a platform fee and eschews minimum account size requirements. “Our systems are flexible and scalable, which lets us service RIAs of any size. We’re happy to work with the full range of firms, from emerging advisors to multi-billion dollar advisory firms, so long as they are serious about growing and scaling a business,” said Pete Dorsey, TD Ameritrade Institutional’s San Diego-based head of sales and recruiting.

Technology has been key to winning over advisors and is one of the company’s three main growth drivers. TD Ameritrade has invested heavily on enhancements with a focus on integration with third party vendors, and today advisors can choose from more than 90 different solutions, such as Salesforce.com on the CRM side. On the portfolio management side, TD Ameritrade has integrated with technology firms such as Orion. The objective is to save Advisors time and generate efficiencies so FAs can spend more time with their clients.

Another compelling productivity tool is portfolio rebalancing via iRebal. What once cost an Advisor $30,000 or more is now available to all TD Ameritrade Institutional clients at no cost. You name it, this cloud-based tool seems to do it: streamline cash management, enable household level rebalancing with tax-efficient asset location and customizable rule sets. IRebal also offers advisors efficient trade ticket generation, auto-investment operation workflow and the potential for dynamic tax-loss harvesting all year long.

The second driver of growth at TD Ameritrade is their investment in Business Performance Solutions. The custodian has developed robust practice management tools to help advisors run better, faster-growing businesses, further supported by a robust online education center.  They also deploy Solutions Consultants to the field to help firms create plans for growth, provide tools and strategies that can enhance the client experience, and improve back-office operations to increase efficiency. They also advise RIAs on best practices for hiring, retention and development of their teams, as well as risk management capabilities.

Alongside Technology and Practice Management, the third part of the growth trilogy is Service. While “service” can seem like a soft concept, TD Ameritrade takes it very seriously because they want a long-term relationship with their Advisors and Firms. TD Ameritrade consistently earns high scores on client service, based on industry surveys and a quarterly client satisfaction index (CSI) it compiles in-house. “Our business is built on a service culture and service remains core to who we are today,” Dorsey said.

It’s somewhat refreshing that TD Ameritrade’s growth is not dictated by only multi-billion asset opportunities.  Their holistic approach allows smaller players with $25 million in AUM to compete while at the same time providing the tools and scale to help billion dollar firms grow at unpresented levels.  If you have not kicked TD Ameritrade’s tires, now may be the time.

John Pierce is Managing Partner at AdvisorLoans.com. John spent more than twenty years at Merrill Lynch and Ameriprise. He earned his MBA from The University of London and lives in Philadelphia. You can purchase his book, Developing Relationships With Emotional Intelligence to Increase Sales From.

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