Custodian consolidation can be a positive
Regarding the Aug. 27 article, “TD-E*Trade merger chatter continues unabated”: Like most independent advisers, I have been a watchful observer of the mergers-and-acquisitions activity among the various custodians.
The adviser-custodian relationship is an integral part of our business and is critical to our success. The destiny of Omaha, Neb.-based TD Ameritrade Holding Corp. is in its own hands.
New York-based E*Trade Financial Corp.’s receptiveness toward consolidation is likely driven by a self-assessment of limited growth prospects and by its disappointing diversification strategies of the past. Moreover, internal cultural and competitive forces will likely limit the roles of [San Francisco-based] Schwab [Institutional] and [Boston-based] Fidelity [Investments] in this emerging trend, relegating each to the part of interested observer.
As usual, it appears that our firm is out of step with the mainstream. For us, the Ameritrade-TD Waterhouse merger and subsequent clearing conversion went without a blip. Our clients were negligibly affected and, quite frankly, uninterested in all the bureaucratic paper-shuffling that transpired.
But for many advisers, there is no middle ground between perfection and disaster when implementing new processes. For them, true happiness and contentment can be achieved only when there is something to complain about.
The Ameritrade/Waterhouse merger opened up tremendous growth potential for the consolidated company and its partners — independent advisers. Joe Moglia and his team bring tremendous energy and industry experience to TD, and their recent initiatives and comments demonstrate a healthy appetite for growth. Leadership isn’t for the faint-hearted, and Mr. Moglia appears to be up to the challenge of reshaping the competitive landscape.
In an industry where size matters, growth through acquisition is the right strategy. For advisers to compete effectively, custodians must grow, reinvest in their businesses and leverage their investments in the latest technologies.
Worry about “system consolidation pain” is really about the inability to accept change. In today’s marketplace, advisers must constantly seek change — and welcome it and embrace it.
The only certainty we have is that there will be change. Those who cannot accept this reality will be left behind.
Jim McGurren, CPA, CFP, Dartmouth Advisory Services Inc., Garden City, N.Y.
Worst-case scenario: Clients holding the bag
Regarding “Offering a 7% VA Solution for those near retirement” [Sept. 10]: A guaranteed 7% for 10 years — in an annuity? Wow!
I haven’t done the math on that yet, but I agree with [certified financial planner Mark] Kenison that it sounds like a promise that is too good to be true.
What I’m really curious about is the “thousands and thousands of scenarios to determine the worst thing that can happen” that Nationwide Financial Services Inc. of Columbus, Ohio, has supposedly run. Just what exactly is the worst thing that it has determined can happen, and how did the company accurately predict the amount of loss that will accrue due to that event?
Haven’t
hedge fund managers — despite their best efforts to hedge that bet — been taken out behind the woodshed over this subprime-loan issue?
It frightens me to imagine a world in the future where insurance companies who make today’s guarantees no longer exist. Who will bail policyholders out — a government that is broke?
Then what?
Michael Farris, Chief executive, BMF Investments Inc., Smithville, Mo.
Our new look gets rave reviews
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Billy Fitzgerald, Accredited asset management specialist, Queens, N.Y.
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Harold Evensky, Chairman, Evensky & Katz Wealth Management, Coral Gables, Fla.
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Jason M. Morley, CFP, CPA/PFS, Senior wealth manager, Piermont Wealth Management Inc., Woodbury, N.Y.
