Get your X’s and Y’s down now, advisers told

Aging advisers need to start planning for the next generation of advisers and clients, Tom Nally, president of TD Ameritrade Institutional, said today at the firm’s fall regional conference in Dana Point, Calif.
“The demographic and generational shift should be front and center,” Mr. Nally told more than 200 advisers attending the event.
Gen Xers and Gen Yers now control about $2 trillion in assets, but that should grow to about $28 trillion as they age, he said.
Advisory firms that wait to attract the next generations “will find it very difficult to build these clients,” Mr. Nally said, pointing out that 86% of surveyed NextGen investors said they will fire their parents’ advisers.
Mr. Nally suggested that advisers reach out to younger investors through their parents and talk about succession planning, as well as bring in junior advisers to attract the next generation.
Many advisers are overconfident about the future of their businesses, Mr. Nally added in an interview.
“Sure, they may have $500 million in assets, but their average client is 72” years old and the assets will disappear as clients die, he said.
TD Ameritrade frequently sees clients left without help when advisers themselves die, he added.
The custody unit Mr. Nally oversees serves more than 4,000 advisers who manage about $180 billion.
The business should reach a “major milestone” this year, Mr. Nally said, hinting that the firm should reach $200 billion in assets.
TD Ameritrade does not directly disclose the amount of adviser assets it custodies.
Mr. Nally said the firm had “another good quarter” in attracting RIAs, but declined to be more specific ahead of the firm’s earnings release next week.
Through its fiscal third quarter, ended June, the company signed up 324 breakaway brokers, a 23% gain from the same period last year.
Registered representatives at independent broker-dealers have been the “sweet spot” for recruiting, Mr. Nally said.
Independent brokers have already made the decision to go independent, he said, and as they build fee assets, often look to set up their own RIA firm.