If carried to fruition, TD Ameritrade Institutional's latest technology initiative will be the first to open its application program interface completely to third-party technology firms able to pass muster during the custodian's security review of their systems.
That review is already under way and is expected to take four to six additional weeks of testing.
In very simplified terms, access to the company's API will allow external programs to query TD Ameritrade's systems seamlessly for data needed by them —for example, an adviser needing a client's latest real-time holdings for a portfolio management program.
In a meeting Thursday with InvestmentNews, TD Ameritrade Institutional president and chief executive Tom Bradley, managing director Zohar Swaine and technology product management director Jon Patullo said that it is too soon to comment on which vendors are likely to be granted access to the API.
The current security testing follows a closed-door technology summit held in March between TD Ameritrade and many of the industry's independent advisory technology vendors.
Mr. Bradley said that the initiative's main objective is to attract new advisers.
“We see this as a way to provide those breaking away from the wirehouses or going independent with the largest number of choices in terms of technology,” said Mr. Bradley, adding that other custodians have made the mistake of limiting their offerings to a select few vendors.
The next reason for the technology initiative, according to Mr. Bradley, is to keep its more than 4,000 advisers happy.
“They don't want to be restricted in what technology they can use, or have to give up something they are already invested in,” he said.
This initiative also gives TD Ameritrade the opportunity to regain some of its past glory as a leader in technology integration; the company was among the first providers of an integrated trading and account management system in 2000.
A race is on between custodians that hope to attract advisers by offering them the best suite of technology offerings.
The Charles Schwab Corp. officially assigned a name to its own technology initiative late last month, now called Schwab Intelligent Integration. Schwab is assessing the popularity of applications used by its advisers prior to undertaking integrations.
The platform to beat, at least in terms of popular perception among analysts, industry experts and many advisers is from Pershing LLC. Its NetX360 platform offers a high level of integration to both fee- and commission-based advisers, though even its systems are not presently integrated with third-party vendors to the level TD Ameritrade is envisioning.
When asked if their initiative was launched in answer to Schwab's recent announcements, Mr. Bradley was adamant that his company had been involved in its planning for months, and cited the technology summit held in March as evidence of this.
Relating to the depth of the integrations, Mr. Swaine pointed out that the goal was full, secure access to the company's platform.
“As long as their systems are secure, we want providers to have access to every field of data they need,” he said.
As for the system, a specific example of level-four access illustrates the two-way flow of data between TD Ameritrade's Veo platform acting as a hub and in turn delivering client or account information to a downstream system — say, a customer relationship management, portfolio management or financial planning program — and in turn being able to pull in data from an external one seamlessly.
Other examples of how an adviser could use the new system includes being able to pass household data between applications, create or submit management fee files from one application and being able to view real-time data for accounts and balances positions in a third-party application.
While the initial round of up to a dozen vendors will be announced in the fall of this year, others will likely be added in 2011.
When asked about its plans to accommodate hybrid advisers with technology, Mr. Swaine said that TD Ameritrade has a working relationship with 10 broker-dealers but is planning to work toward deeper levels of technology integration with a subset of them.
Other initiatives discussed during the meeting included launch of a Veo application for the Apple iPad either this year or early 2011 as well as integration of futures trading and the addition of other smart-phone applications for the Veo platform.