Nally promises to continue RIA advocacy efforts at TD

By Dan Jamieson

Feb 12, 2012 @ 12:01 am (Updated 6:02 pm) EST

It was a baton pass that saddened many financial advisers and irked others because of its timing.

TD Ameritrade said last week that Tom Bradley, the much admired head of its institutional business, would be leaving that position to take the reins of the company's retail-brokerage business, replacing John Bunch, who resigned Jan. 31 to become chief executive of The Mutual Fund Store LLC.

Assuming Mr. Bradley's duties at TD Ameritrade Institutional is Tom Nally, 40, former head of institutional sales at the firm.

News of Mr. Bradley's departure last Monday caught the industry by surprise, as the company's annual adviser conference in Orlando, Fla., had concluded the Friday before without a word about the pending change. TD Ameritrade executives said that the reason they didn't make an announcement of the executive changes at the conference was that they were hashing out details over the weekend.

Advisers who use the firm's custody services have long assumed that Mr. Bradley, 49, one day would take over for Fred Tomczyk, 56, as chief executive of TD Ameritrade Holding Corp.

“Fred probably has succession in mind” as part of the management shuffle, Mr. Bradley acknowledged in an interview.

The change is a promotion for Mr. Bradley, an industry veteran of nearly 30 years who has been involved in the registered investment adviser custody business since 2000.

For his part, Mr. Bunch said that his departure “had nothing to do with TD [Ameritrade]” or his career prospects there.

“The Mutual Fund Store has a unique business model which ties into my skill set” of running a growing branch network, he said. “I saw this as the next natural progression in my career,” Mr. Bunch said.

For Mr. Bradley's career, the change is “a brilliant move,” said Frank Reilly, president of Reilly Financial Advisors LLC, which manages $360 million. “For those of us who have worked with him for 12 years, it's sad to lose him.”

Although TD Ameritrade advisers have confidence in Mr. Nally — veterans of the firm know him from his prior stint running operations, and newer arrivals were recruited by him and his team — they wonder about losing a forceful advocate.

Under Mr. Bradley, the firm was outspoken in supporting a fiduciary duty for advisers and keeping oversight with government regulators, rather than turning it over to the Financial Industry Regulatory Authority Inc.

“I think the firm has gotten [breakaway brokers] because the most vocal person out there for the fiduciary model was Tom Bradley,” Mr. Reilly said.

"STRONG ADVOCATE'

“We really do see him as an advocate — it's partly the way TD [Ameritrade] has positioned itself,” said Randall Manley, principal at Lodestar Private Asset Management LLC, which runs $300 million for clients.

“Tom Bradley brought independents to the forefront,” said Dean Parisian, founder of Native American Advisors Inc., adding that small advisers such as himself are treated well at the firm. “I don't think there was a better representative in the country for independent, unbiased advisers.”

Mr. Bradley acknowledged his prominent role but insisted that “a year from now, [Mr. Nally] will be as well-known.”

In an interview, Mr. Nally said that he will continue being a “strong advocate for the RIA community.”

Mr. Bradley's promotion “can only be good for the fiduciary effort, because it puts him in a greater position to push the importance of fiduciary standards,” said Knut Rostad, president of the Institute for the Fiduciary Standard, an adviser group that TD Ameritrade has supported.

Mr. Rostad is also a compliance officer at Rembert Pendleton Jackson, which manages $700 million.

He said that he doesn't know Mr. Nally, “but one could surmise he has some or all of [Mr. Bradley's] fiduciary DNA.”

But”the big mistake he could make now is to be Tom Bradley. Tom Nally needs to be his own person,” Mr. Reilly said.

But advisers do want the firm to be active in policy debates.

The firm's day-to-day public-policy work is headed by Skip Schweiss, president of TD Ameritrade Trust Co., who continues in that role.

Mr. Nally's day-to-day job, of course, is to keep advisers happy while expanding the ranks and advancing its distant No. 3 spot in the adviser custody business.

TD Ameritrade Institutional holds about $160 billion in custody for more than 4,000 advisers. The biggest player, Schwab Advisor Services, holds about $680 billion in custody, while No. 2 Fidelity Institutional Wealth Services holds more than $475 billion.

Custodians compete largely in the breakaway market and by attracting a larger share of new cash from existing RIA clients, many of whom use more than one custodian.

“It becomes an incredible nightmare to transition” to another custodian, said Mr. Manley, who manages about $300 million, the majority of it at Schwab.

TD Ameritrade has the rest.

djamieson@investmentnews.com