SAN FRANCISCO — J. Thomas Bradley Jr., president of TD Ameritrade Institutional, is feeling the heat from financial advisers as he tries to balance their concerns and the demands of his parent firm, TD Ameritrade Holding Corp., to continue to increase assets.
Acknowledging that the company’s custody clients have been experiencing problems and abnormally long delays with the call center service and technology desks, he sent an e-mail June 8 to advisers to assure them “that we have taken significant steps to remedy these problems.”
David Mendels, a New York-based principal of Creative Financial Concepts LLC, a Sedona, Ariz., firm that manages $40 million, said he finds that the wait times for service from TD Ameritrade are out of character for the company.
“In five or six years, I’ve never waited more than a minute or, yearend, two minutes, and recently, it’s been a half hour,” he said.
“I waited for 47 minutes, and I can’t even get through to service now,” said Michael McBride, president of Seattle-based McBride Financial Advisors LLC, which manages $70 million.
Meanwhile, as Mr. Bradley was looking to remedy the tech concerns, some Fiserv Investment Support Services advisers became outspoken about TD Ameritrade as their acquiring custodian because of service and pricing issues, according to several advisers and competing custodians.
Fiserv Inc. of Brookfield, Wis., agreed several weeks ago to sell Denver-based Fiserv Trust Co. and its institutional retirement plan and adviser services operations to Omaha, Neb.-based TD Ameritrade Holding.
Some Fiserv advisers doubt that it is a good match.
“TD will tell us anything right now, but no one trusts them beyond [the first] six months” of owning [Fiserv] ISS, said Sam Jones, a Fiserv custody client and president of All Season Financial Advisors, a Denver-based firm that manages $130 million.
Industry observers say that this is a level of contentiousness that Mr. Bradley didn’t face at TD Waterhouse Institutional Services Inc., which Ameritrade purchased last year.
His demeanor historically has permeated the service culture at the company in positive ways, several advisers said. What’s more, Mr. Bradley has a reputation among advisers as a personable and accessible executive.
This push and pull from advisers and shareholders puts Mr. Bradley in the middle, said Steve Winks, principal of SrConsultant.com in Richmond, Va.
Mr. Bradley declined two requests to be interviewed.
Meanwhile, TD Ameritrade is in a battle with two large shareholding hedge funds, JANA Partners LLC of New York and SAC Capital Advisors LLC of Stamford, Conn., which together own 8.4% of the company. Their managers are calling for TD Ameritrade to acquire massive economies of scale by merging with The
Charles Schwab Corp. of San Francisco or E*Trade Financial Corp. of New York.
This quest for scale is at the root of the turmoil at TD Ameritrade, according to Mr. Winks.
“They’re trying to eliminate overhead by developing critical mass through acquisitions,” he said. “It’s OK if you can handle service issues, but they have not.”
This has placed Mr. Bradley in a tough spot, Mr. Winks said.
“Tom is [the] new guy in an existing organization, and if you have zero political capital, it’s not the time to press for complex issues to be resolved,” he said.
While conceding that a merger with E*Trade makes sense economically, FBR Group of Arlington, Va., presented research last Friday indicating that “significant obstacles must be overcome before such a deal could move forward.” Specifically, the investment bank said, E*Trade is unlikely to make a deal without the support of TD Bank.
Meanwhile, the call center wait times already largely have gone away, according to Katrina Becker, a spokeswoman for Jersey City, N.J.-based TD Ameritrade Institutional.
It is assigning people from other departments in the company to man the phones, she added.
But for some advisers, TD Ameritrade’s efforts to resolve its service problems may come too late.
“I don’t need a lot of service, but when I call, I need to speak with someone,” said Scot L. Stark, principal with Stark Strategic Capital Management Inc. of Freeland, Md. “When I started moving assets, I started getting calls asking why, but I called them, and they never called back.”
The call times largely resulted from advisers’ making unnecessary calls, Ms. Becker said.
“The top 10 [questions asked by advisers] are all [answered] on Veo,” which is the company’s website, she added.
But the service issues go deeper than wait times, according to Robert Grey, president of Denver Money Manager, which oversees $50 million. He is a Fiserv custody client who spoke with several advisers who do business with TD Ameritrade as part of his due diligence before moving his assets over.
“The one constant is that the people who feel best about TD are the people with upwards of $1 billion [of assets under management],” Mr. Grey said.
“There is uneven service,” he said. “[By locking arms with other Fiserv advisers], we hope to create critical mass to even that playing field.”
That critical mass has reached 23 Fiserv firms with a combined $2.3 billion in assets, according to Mr. Jones.
This consortium of concerned Fiserv advisers began to form after Mr. Bradley addressed them by teleconference early this month, Mr. Jones said.
Mr. Jones interpreted Mr. Bradley’s comments during that teleconference as saying “that it’s my way or the highway [on pricing].” Mr. Jones said, “It may be the highway.”
Ms. Becker disagreed with Mr. Jones’ assessment.
“That is incorrect,” she said. “We absolutely plan on continuing the omnibus trading and their pricing.”
Omnibus trading is treasured by Fiserv advisers because it allows them to spread the cost of a trade across multiple accounts.
TD Ameritrade’s assurance that it will continue omnibus trading was met with skepticism by Fiserv advisers because Mr. Bradley won’t offer them any guarantees about how long the Fiserv pricing scheme will stay in effect.
Ms. Becker acknowledged that TD Ameritrade, indeed, will offer no ironclad assurances.
“I don’t believe there’s any specific time frame,” she said.
