Tom Bradley had several pieces of advice for the assembled fee-only financial advisors in his keynote address to NAPFA's national conference on Thursday, May 20, but the most important is also the most obvious--always put the client first.
Although TDAmeritrade Institutional, the company of which Bradley is president is the national sponsor of NAPFA's conference, that's not the only reason he won the speaking slot. Bradley has also been a vocal advocate for the interests of the independent advisory channel, from his opposition to the so-called Merrill Lynch rule through TD's sponsorship of programs like the NAPFA Money Bus.
Bradley began by alluding to his address to the same group last year and noting that while things could still improve, conditions for independent advisors are much better in 2010. One piece of evidence he cited to back up that contention was a front-page article from the January 3, 2010 edition of the Wall Street Journal, which talked about the increase in the number of brokers leaving wirehouses to become independent advisors.
He also made reference to surveys conducted by TDAmeritrade that found a 33% increase in the number of independent advisors during the period from the start of 2005 through the second quarter of 2009, while the number of brokers declined by 14%. During the same period, Bradley noted that assets for RIAs went up 41%, while stockbroker assets were down 15%. Last May TD found that 49% of advisors reported adding clients while 18% said the opposite. In survey results from April of this year, the number of advisors losing clients was cut to 8%, while the number of advisors adding clients rose to 68%.
"This shows that independent advisory businesses are coming back much healthier than they were. In fact they stayed healthy through a difficult period," Bradley said, noting that 61% of new assets were coming from full commission sources. "So we're taking money from the big folks," he continued.
Bradley also urged advisors to find new ways to add value for their clients and to differentiate themselves from competitors. Options are one area he suggests as a differentiator, noting that advisor option trades while still small are up 142% over the last two years. He cautioned however, that its important that advisors using options understand them and noted that TD is creating educational curriculum on options with courses for beginners, advisors with intermediate knowledge, and an advanced group. The courses will be offered at no charge, with the first group likely to be launched this summer.
In wrapping up Bradley noted that the advisory business is certainly more difficult than it was five years ago, but the market cataclysm has also helped advisors work smarter rather than harder.
"The key takeaways for you are we are stronger than we were last year," he said. "There's a lot going on in the world, but we're doing much better. Let's hope that can continue. We're taking market share from big wirehouses, but they're not dead. They're still alive and will fight dirty in many cases. We need to be aware of that. We need to be on the defensive, but we also need to be on the offensive and talk about how what we do is different and why it's better for individual investors" Bradley said. "If we do all those things, I'm absolutely confident that we will be successful. But, if we do one more thing I believe that our success if virtually guaranteed and that one more thing is to never lose sight of what is most important. We must continue to put the client first. If we do that, we will do more than just take market share from the wirehouses, we will actually be larger than the wirehouses, we'll have more assets under management and we will be the dominant force in the financial services industry."