TD Ameritrade got a positive reception Thursday from advisers for its plan to offer a free, web-based version of the popular iRebal rebalancing software.
Many of the 1,500 advisers in attendance at the firm's annual conference in San Diego applauded when Tom Nally, head of the custody unit, announced the pending rollout this morning.
“It's a very big deal,” Mr. Nally said in an interview.
That's because TD advisers currently pay $10,000 to $50,000 a year in licensing fees for a computer-based version of the system.
The firm plans a full rollout of the web-based application some time this summer.
Mr. Nally said the online version of the program will be fully integrated with Veo, the firm's technology platform. “It's not 'iRebal Lite,'” he said. There will be some minor differences, “but 99% [of advisers] will have everything they need” from the online version.
The software has not been a profit center for TD Ameritrade, he added. The firm feels the free offering will make advisers much more efficient.
Rebalancing portfolios has long been a challenge for advisers generally.
Company executives added that 90 software companies are currently working on integrating a variety of applications into the Veo platform. TD officials are convinced that their open-access Veo project, which opens up the system to approved software vendors, will help the firm gain a competitive advantage.
TD officials also reported that the branch referral program, AdvisorDirect, is seeing 41% year over year growth in both asset levels and number of conversions.
Tom Bradley, head of TD Ameritrade's retail business, and until a year ago the head of the custody unit, told attendees that technology and compliance requirements had been streamlined, making the referral process easier for branch-based advisers.
The firm targets $500,000 households for the 154 RIA firms in the referral program. When asked by a conference attendee about possibly losing out on smaller, but still desirable clients, Mr. Bradley insisted that the size of targeted accounts was flexible.
Mr. Nally said branch referrals are based on client needs for higher-end services.
“We don't do financial planning” in the retail offices he said.
The retail side of the business does offer packaged portfolios of funds and ETFs for a fee, “but I doubt that many advisers are just doing a packaged allocation” without offering more tailored advice, Mr. Nally added.
While TD's retail business deals with do-it-yourself investors, the firm is worried about their exposure to long-term bonds.
“We are writing to retail clients, with long-term bond funds, to make sure they understand how those things work” if rates go up, said Fred Tomczyk, chief executive of TD Ameritrade during an opening session today.
The communication, sent to investors today, is entitled "Bonds Are Not Gravity Defying: Be Prepared." It discusses risks with both bonds and bond funds.
Mr. Nally said the institutional side plans a similar communication to advisers, and possibly a piece that can be used with end clients. About 30% of TD advisers' assets are in fixed income, 10% in cash, and the rest mostly in equities, he said.