TD Ameritrade's Nally: Rivals cast RIA marketplace as 'Wild West'

TD Ameritrade Institutional's Tom Nally is urging financial advisers to engage with lawmakers to help increase investor confidence amid heightening regulatory scrutiny of the wealth management industry. Registered investment advisers are examined by the U.S. Securities and Exchange Commission once every 10 years on average, and “some not all,” Mr. Nally, president of TD Ameritrade Institutional, which provides brokerage and custody services, said Thursday morning at TD Ameritrade's national conference in Orlando, Fla. “That's not good for confidence.” The infrequency of examinations allows competitors to cast registered investment advisers as the “Wild West” of financial advice, a perception they can help change by reaching out to legislators in Congress, Mr. Nally said. The SEC plans to increase the number of RIA examiners by almost 20% this year to 630, according to a person familiar with the initiative. The agency examined 10% of about 11,500 registered advisers in fiscal 2015, compared with about 51% of the 4,500 brokers that had exams by the SEC and the Financial Industry Regulatory Authority Inc., the industry-funded broker regulator. Brokers compete with RIAs for assets as they seek to help individuals and families with financial planning. TD Ameritrade Institutional has created a webpage called the “Legislative Action Center” to help advisers engage with government officials who influence policy in financial services, an industry suffering from a low level of trust, particularly among the millennial generation poised to inherit trillions of dollars, according to Mr. Nally. Advisers can also inform themselves on current issues such as the impact that the Labor Department's proposed rule may have on individual retirement accounts, the webpage shows. Mr. Nally's call for more RIA examinations comes as the advice market is facing major regulatory changes, not the least of which is a regulation proposed by the DOL that would require all advisers to act in the best interests of their clients when servicing retirement accounts. Right now, brokers must only do what's “suitable” for their clients, while registered investment advisers are already held to the best-interests standard by the SEC.