Says newfound focus on wealthier clients alienating reps; breakaways on the rise
Tom Nally, who took over as president of TD Ameritrade Institutional from Tom Bradley in February, has his sights set on enticing more brokers from the wirehouses and full-service brokerages to the custodian's platform for RIAs.
Mr. Nally stopped by InvestmentNews' offices on Wednesday to discuss the business environment for the third-largest custodian in the country and his plans to continue increasing TD's business.
The firm attracted a record 120 breakaway brokers to the RIA model and the custodian platform last quarter. That's almost 50% more than the same period in 2011. For fiscal 2012 — TD's year-end is in September — the company has signed up 324 breakaway brokers, a 23% gain over last year's first three quarters.
“The RIA is now the aspirational model for brokers,” said Mr. Nally, who was previously TD's managing director of institutional sales. “We don't see the trend slowing down. We have more brokers actively engaging us all the time.”
One major driver of the movement is the beating big Wall Street houses took in the financial crisis, according to Mr. Nally. “People are just not as enamored with the old brands as they used to be,” he said.
Another factor, according to Mr. Nally: the maturing of the RIA industry. He credits the wide range of technologies and services available to advisers looking to go independent, as well as the growing number of firms helping them make the break.
While TD Ameritrade may compete with many of these firms for the same advisers, the executive suggested that the rising tide is lifting all RIA boats.
“In some cases, we may work with the Dynastys and the HighTowers, and in others we may compete with them,” Mr. Nally said. “But the more competition and awareness, the better it is for all of us.”
Despite the oft-stated strategy of many wirehouses to concentrate on high-net-worth clients, they are losing advisers and clients in all segments, according to Mr. Nally.
“You look at the data from Cerulli, and the wirehouses have dropped 11 points in the high-net-worth market between 2008 and 2011. If they're focused on that, they should at least be retaining their market share,” he said.
In addition, wirehouses' effort to move advisers away from less-affluent clients will hurt them in the long run, Mr. Nally said.
“They've turned their back on the wealth accumulators in the economy,” he said. “We're trying to get our advisers to embrace this segment and be prepared for the enormous demographic shift coming. There's going to be trillions of dollars at stake in the next 10 years.”
Mr. Nally plans to have TD Ameritrade vying for it.
