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TD Ameritrade CEO Solemnly Swears not to Steal RIA Clients. Here’s What RIAs Think of That

By Garrett Keyes February 14, 2019

TD Ameritrade won’t “compete in the same space as RIAs,” Tim Hockey, CEO, has proclaimed. TD Ameritrade uses their online brokerage to “enable self-directed investors” in the retail investing space to “handle the reins” and manage their own money, he says. And instead of taking business away from RIAs, TD Ameritrade believes working with RIAs is the best solution for individuals and families that don’t want to handle the investment reins, he says.

“Rather than competing for the same clients as RIAs, TD Ameritrade is focused on accelerating RIAs’ abilities to serve their clients better,” Hockey says.

“Historically custodians provide a service and work in conjunction with RIAs like us,” Judith Lu, managing director of Los Angeles-based RIA Miracle Mile Advisors, says. Often custodians will funnel clients with complex balance sheets to advisors if the custodian is unable to service them effectively, she continues. At TD Ameritrade this happens through its AdvisorDirect program.

But sometimes firms offer their own internal solutions that compete with RIAs and “cannibalize” their business, she says. Charles Schwab is an example, in Lu’s eyes. “For many years Charles Schwab did not compete with RIAs. But then they decided ‘this is a really good niche of business’ and rolled out their own model,” Lu explains.

When asked whether Charles Schwab competes with RIAs for clients, a media spokesperson said: “Today’s investors decide what type of relationship they want based on their own specific needs and preferences – many find appeal in the nationally branded, wealth management services of a large firm, like those provided in our retail business, while others seek the highly customized wealth management approach of RIAs. No two investors are identical, and choice is important when selecting an advisor — we’ve always believed in encouraging a range of choices and flexibility to choose the right approach to managing their money.”

Lu insists “RIAs want partners that will support their growth and not cannibalize their clients.” And TD Ameritrade’s announcement “suggests the firm’s intention is to be good partners with RIAs and not compete,” Lu says. “It’s a big milestone to hear they won’t compete with RIAs and we’ll wait to see what actually happens.”

And Lu’s not alone in her thoughts. Mirroring Lu’s sentiment, a TD Ameritrade spokesperson says: “Advisors will believe it when they see it,” but TD Ameritrade will “honor its words [to not infringe on RIA business] by delivering great technology, service, client referrals, and stay out of the way.”

TD’s announcement follows the firm’s acquisition of trading platform Scottrade Financial Services in September of 2017.

After the Scottrade acquisition, TD Ameritrade wanted to look at its “broader strategy,” according to its media representative.

Speaking with FA-IQ, Jeff DeMaso, director of research at $5 billion AUM Adviser Investments, says Hockey’s announcement is “a way for TD to create some separation in the industry” for itself.

“TD is clearly holding itself out there as a partner for RIA firms and trying to distinguish themselves” from their competitors, he says. Adviser Investments has clients using both Schwab and Fidelity as a custodian, and the firm has “been looking at working with TD as a means of diversifying,” DeMaso says. “There is still a lot of competition in the RIA space and it’s always on advisors to demonstrate their value to clients,” DeMaso claims. The announcement from Hockey is “a nice bit of reassurance from TD,” he notes.

Greenwich Investment Management managing director Drew Collins seemed to echo DeMaso’s sentiments. Hockey’s announcement “is potentially obviously a factor for us. We would rather see them not compete with us,” he says. “I think people were concerned that TD Ameritrade was starting to offer in-house products and programs,” he states. But for Greenwich Investment, Collins adds he doesn’t think the announcement changes much. The $850 million AUM firm uses TD Ameritrade as its custodian for “a number of clients” and is an “approved advisor on the AdvisorDirect program.”

Commenting on whether Fidelity – another popular custodian which also offers advice direct to retail investors – competes for RIA clients David Canter, head of the RIA segment Fidelity Clearing & Custody Solutions, says: “Investors are always looking for advice in different ways, depending on their preferences and needs and we believe they should choose the relationship and advice model that’s right for them. We are deeply committed to the advisors we work with – we invest billions annually to deliver best-in-class technology and service, we offer a dedicated team of practice management consultants, we host hundreds of educational and business-building events around the country, we deliver extensive tools and insight on industry best practices, and we provide a vast suite of flexible investment solutions. All of these investments are focused on delivering what they need to help them grow – and the RIAs we work with are growing and that’s how we measure our success.”