TD Ameritrade gains from brokers' independence movement

Custody unit claims record 441 breakaway brokers in fiscal 2012, up 27%

Nov 5, 2012 @ 3:37 pm

By Dan Jamieson

TD Ameritrade Institutional attracted a record 441 breakaway brokers to its custody platform in fiscal 2012, which ended Sept. 30, up 27% from the 348 breakaways landed in fiscal 2011, the company said today.

The company serves about 4,500 advisers who hold about $180 billion in custody at the firm.

Nearly a quarter of those breakaways joined an existing firm, Peter Dorsey, head of sales for TD Ameritrade, said in an interview.

The trend toward independence is “definitely accelerating,” he said.

Going forward, he expects more TD Ameritrade recruits to team up with existing firms because of the favorable economics of joining an established operation.

The percentage breakdown by channel for TD's recruits last year was not available, but “the biggest pond we've been fishing in is the independent broker-dealer space,” Mr. Dorsey said.

Brokers at independent firms already embraced the idea of going out on their own, making them open to setting up their own RIA firm, he said.

Separately, in comments to analysts today, Fred Tomczyk, chief executive of TD Ameritrade Holding Corp., said the firm this year bumped up the minimum size of client referrals under AdvisorDirect, TD's branch-referral program, to $500,000, from $350,000.

The move was part of a larger plan to better align products with target markets, he said.

RIAs in the AdvisorDirect program pay 25% of what they charge on [25 basis points on] client assets they land from a branch referral.

TD Ameritrade Holding Corp. released its fiscal year results a week ago Monday, but delayed its analyst call by a week due to Hurricane Sandy.

The firm continues to struggle with low interest rates and sluggish trading volumes, but its total assets reached a record $472 billion as of Sept. 30.

Net new assets for the fiscal year came in at $40.8 billion, about equal to the $41.5 billion brought in during fiscal 2011.

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