TD Ameritrade applies 'dating app' innovation to RIA M&A

The pending $26 billion acquisition by Charles Schwab Corp. has clearly not left TD Ameritrade Institutional just sitting back and watching the clock, as witnessed by the big custodian’s latest announcement to help connect buyers and sellers in the RIA space.

RIAConnect, which leverages TD’s popular Veo One platform, is a kind of dating app for advisory firms looking to join forces.

“It’s safe, secure and free,” said Scott Collins, TD’s managing director of sales consulting.

When pressed, Collins acknowledged the program’s similarities to some dating apps.

“The concept is similar; you get matched based on your interests, objectives and goals, and you can assign degrees of importance to things,” he said. “For example, if you’re looking to join a firm and don’t want to leave a certain geographic area, you can make that clear.”

The program, which is available to any of the 7,000 RIAs custodying at TD, starts with an anonymous online profile that should take between 10 minutes to a half hour to complete, depending on how much detail is provided.

“You could take 50 power lunches and travel around the country, or have a look at hundreds of profiles and screen it to narrow your search,” said TD spokesman Joseph Giannone.

RIAConnect is actually a scalable version of what Collins and his team have been doing for years at TD. But without the online profiles and algorithms, it was a slower and more labor-intensive process.

“This is a force multiplier that will make more connections and more introductions,” Collins said. “On the M&A side, it’s challenging to find good matches with the right cultural fit and geography, and it’s also hard to meet face to face.”

Collins expects to have a “couple hundred” RIAs signed up on the RIAConnect platform by the end of June.

“A lot of advisers want to grow through acquisitions,” he added.

But, while the new program gets high marks for effort and automation, it is also seen as limiting because it only connects RIAs with those potential buyers and sellers that custody at TD.

“It could work but it’s only giving you a small portion of the universe,” said Mark Bruno, managing director at Echelon Partners.

“Also, it appears you have to do a lot of work to really understand who it is (you are potentially connecting with), how do you use a tool like this to understand the quality of buyers and sellers?” he added. “The best buyers might actually be outside their system.”

David DeVoe, chief executive of DeVoe & Co., who launched and formerly ran the M&A/transition platform at Schwab, said the biggest problem with the virtual format is “de-personalization.”

“Online dating tools for RIA M&A have been around for 15 years, but have had mixed success at best, especially for sellers over $150 million,” he said. “Running another custodian's online matching system gave me a clear view of the challenges. The de-personalization of the medium creates a number of obstacles, both technically and culturally. For example, email alerts about outreach are rampantly ignored, some parties carpet bomb sellers, others are not as strong at highlighting what they seek. Integrating this tool into the VEO platform may resolve some or all these issues as there is a common foundation.”

In addition to connecting buyers and sellers, RIAConnect also has talent search feature that allows recent graduates or career changers to post online profiles.

DeVoe said that feature is the right platform at the right time.

“The RIA industry has a talent shortage, and any new tools that can help bring more people into this industry is a good thing,” he said. “And if they are at a wirehouse with a book of business to bring, better yet.”