TD Ameritrade adds video performance reports for robo-advice clients
Custodian ramping up its digital-platform offerings in race to accumulate assets.
Clients of TD Ameritrade’s robo-advisers have received personalized video statements of their first-quarter performance, as the custodian begins introducing enhancements aimed at helping it compete for assets against other top digital-advice platforms.
The custodian sent videos to owners of about 100,000 accounts, highlighting progress toward their established goal and reviewing portfolio positioning and performance, said Keith Denerstein, director of guidance and product management at TD Ameritrade.
“We keep our eyes open for what’s happening in the marketplace, and we saw some similar happenings from some financial advisers and other non-financial digital providers,” he said. “We saw that it hadn’t been done thus far by any of our competitors and thought it was a good opportunity to stand out.”
Omaha, Neb.-based TD Ameritrade plans to generate the performance videos for clients each quarter, and expects to add more features and upgrades throughout the coming months, Mr. Denerstein said.
Later this summer it will start providing tax-loss harvesting, a feature some of its competitors already offer.
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The videos went last month to clients of its all-digital robo-adviser Essential Portfolios and to those with Selective Portfolios, its digital platform that also provides access to human advisers. TD Ameritrade Investment Management Services has a combined $14.5 billion in client assets on the platforms, the vast majority of which are part of the hybrid-robo, an early generation of which launched in 2009.
Together TD Ameritrade’s robos rank third in terms of total assets, after Vanguard Personal Advisor Services, which has a whopping $65 billion in assets, and Schwab Intelligent Portfolios, which has about $16 billion. The start-up robo-advice providers are led by Betterment, which has about $9 billion under management.
The overall digital-advisory market, which Cerulli Associates estimates was about $83 billion at the end of last year, is projected to grow to approximately $385 billion by the end of 2021.
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Some industry analysts think TD Ameritrade is well positioned to excel in digital advice, but will need to keep up with the stiff competition.
Davis Janowski, senior analyst with Forrester Research, said the custodian has tremendous potential, but it will need to continuously improve to match the progress of others in the automated-investing space.
“They certainly have the internal resources and brain power available; it is a question of how much of a commitment they make to developing out new features and keeping up with competitors,” he said.
Others point to TD’s access to extensive information about customers, both those who invest directly with the firm and those who work with the approximately 5,000 financial advisers who custody their clients’ assets with the institutional arm of the firm.
“As a retail platform, they are in the catbird seat,” said Will Trout, head of wealth management research for Celent, a technology-focused research and consulting firm. “TD Ameritrade can build on economies of scale and also learn from the mistakes of ‘first movers’ including some direct competitors.”
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Essential Portfolios offers portfolios of passive exchange-traded funds for a flat fee of 30 basis points, and a $5,000 minimum investment. Selective Portfolios, whose human-advice component functions through a call center and branches around the country, costs between 75 and 125 basis points, and carries a $25,000 minimum. Its investment options include ETFs and mutual funds.
Selective Portfolios was rebranded in 2016, the same year Essential Portfolios began.
In March, TD Ameritrade said Essential Portfolios had attracted about $500 million in assets, with an average account value of $77,000, compared to Selective Portfolios accounts that had an average balance of $130,000.
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