TD Ameritrade beats earnings estimate

Firm brings in $10.8 billion in net new assets

Jul 23, 2013 @ 2:50 pm

By Dan Jamieson

Shares of TD Ameritrade Holding Corp. jumped more than 5% today on better-than-expected quarterly financial results.

The company's stock hit a high of $27.50 today before trading off.

Company officials attributed the results to an improved trading environment in the individual investor business, expense controls, and higher fee-based revenue from the firm's adviser referral program and TD Ameritrade's own managed-account offering.

The firm brought in $10.8 billion in net new assets in the quarter. About three-quarters of net new flows come from registered investment advisers that hold assets in custody with TD Ameritrade Institutional, president and chief executive Fred Tomczyk said in an interview.

TD Ameritrade finished the quarter with $523.5 billion in total assets. The firm's 4,500 RIAs control about 40% of that total, or around $210 billion. The company does not separately report data from its RIA custody business.

Since the fiscal year began in September, the RIA custody unit has landed 310 breakaway advisers, said Tom Nally, president of TD Ameritrade Institutional, a run rate about 4% less than the 441 recruits attracted in the one-year period ended September 2012.

The slight slowdown “is a timing situation,” Mr. Nally said. Advisers “are making a significant jump” in breaking away, he said. “They have to make sure they have all their ducks in a row.”

TD Ameritrade also noted that it produced a record $65 million in “market fee-based revenue,” which includes fees earned from its AdvisorDirect branch-referral program with RIAs, and its internal mutual fund and ETF wrap program called Amerivest.

The company earns 25% of the fee charged to clients who are referred to RIAs under AdvisorDirect. RIAs now manage $19 billion in the program.

Amerivest, which offers model portfolios constructed by Morningstar Associates, has $8 billion in assets.

Pretax income for the quarter was $298 million, up 17.1% from a year earlier. Net revenue was 8% higher, up $725 million over the same period.

Earnings per share came in at 33 cents, up 17.9% from a year earlier.

Analysts were expecting a profit of 31 cents per share, according to Thomson Reuters.

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