Confirming months of speculation, TD Waterhouse Institutional Services has announced that it will soon start charging for the first time for membership in its AdvisorDirect client referral program as well as penalizing advisors who attempt to pull assets out. CEO J. Thomas Bradley Jr. also signaled a shift in its advisor recruiting in a bid to convince successful wirehouse brokers to sign up with Waterhouse as independent RIAs.
In an interview during Waterhouse’s Partnership conference in San Diego, Bradley said that beginning March 1, he would levy a charge of 15 basis points annually on assets advisors bring in via AdvisorDirect. Advisors would also face a minimum charge of $10,000 a year “to make sure advisors in the program are active,” he said. An advisor bringing in about $7 million a year would thus be exempt from the minimum fee.
Bradley also said that he wants to see the average size of new accounts produced by AdvisorDirect climb to $1 million from the current $750,000. Aligning itself with rival Charles Schwab, which charges penalties if assets brought in through its referral program are moved to another custodian, Bradley said TD Waterhouse would start levying a 75-basis-point fee in such cases. The participation charges and penalties will not apply to assets brought into AdvisorDirect before March 1.