Strengthened in advisor numbers and assets under custody by completion of its acquisition of Fiserv ISS, TD Ameritrade opened its 2008 National Conference in Orlando on February 7 with a record 1,700 attendees, 1,000 of them investment advisors. TD Ameritrade Institutional President Tom Bradley introduced the company's new chief operating officer, Fred Tomczyc, whom Joe Moglia lured away in mid-2007 from the vice chairman's post at Toronto Dominion Bank, which owns 40% of TD Ameritrade.
Tomczyk outlined plans to pour $150 million into TD Ameritrade to support advisors with, among other things, enhanced technology, mutual funds platform, and statements, and then announced that Bradley, well-known for his stand in support of fiduciary responsibility to clients, has been "named Financial Services Visionary of the Year," by the Division of Personal Financial Planning at Texas Tech University. Bradley outlined the firm's commitment to support investment advisors and says that the new investment advisor agreement between TD Ameritrade Institutional and RIAs will state: "TD Ameritrade is committed to serving the registered investment advisor community and to support, promote and champion matters of significance to it, such as the fiduciary standard to which advisors are held." Advisors will see the agreement in March.
Bradley introduced CEO Joe Moglia, who spoke of the firm's willingness to take certain business risks if the reward is appropriate but not when the risks could be "catastrophic." That's not the business the firm is in, Moglia explained, adding that the refusal to get into the area of subprime "got us through this subprime mess literally unscathed."
In an exclusive sit-down interview with Investment Advisor, Bradley spoke of the SEC's recently released Rand Study, saying that the findings were no surprise and that TD Ameritrade had undertaken two similar studies--with similar results--years ago. Bradley suggested that the SEC put together a panel consisting of wirehouses, independent B/Ds, RIAs, consumer advocacy groups such as the Consumer Federation of America, and individual investors, to iron out a plan to ease investors' confusion over who is a broker-salesperson, and who is a fiduciary-bound investment advisor. He points out that the majority of reps want their clients to do well, but that fiduciary responsibility is not the same as a rep's suitability standard, and he outlined a novel way of reps and investment advisors working for clients: first clearly define and disclose the roles and loyalties of rep and investment advisor. Ditch the "two hats" scenario. Have reps, whose legal loyalty must be to their firm, even as they must demonstrate suitability to customers, become wholesalers to the investment advisors, not to individuals. Investment advisors would become the relationship person with individual investors, acting in clients' best interests and vetting investments proposed by reps--in effect acting as a gatekeeper. Asked if his B/D brethren were discussing any such solution, Bradley says he hasn't heard of that, and frankly, neither has this reporter. But is an interesting and creative suggestion.