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Industry Spotlight > RIAs

TD Ameritrade Adds More Breakaway Brokers

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TD Ameritrade said Thursday that its institutional division added 260 breakaway brokers in the first three quarters of its fiscal year, up close to 20% from the same period a year ago. According to the company, the advisors joining TD Ameritrade’s platform came from both national/wirehouse firms and independent broker-dealers.

“The fee-based fiduciary business model of independent RIAs is attractive to brokers who want to be proactive and don’t want to sit back and wait to see how a rewrite of the fiduciary rule and other pending regulatory changes might impact their livelihoods,” said Tom Nally, managing director of sales, TD Ameritrade Institutional, in a press release.

“Because RIAs already operate as fiduciaries, brokers at traditional full-commission firms foresee fewer regulatory challenges and fewer conflicts of interest in the independent model, which can be good for business and good for clients,” Nally explained.

According to the latest TD Ameritrade Institutional RIA Sentiment Survey, advisors say most of their new assets (56%) are coming from traditional full-commission brokerage firms.

“Advisors … want the freedom to do what’s right for their clients, choice and flexibility in investment options and the potential financial benefits associated with becoming an independent advisor,” said Nally. “Going independent by establishing a firm or joining an existing RIA is a preferred path for advisors, especially as more investors turn to the independence and objectivity of the RIA model for help managing their wealth.”

TD Ameritrade cited the case of Brent Forrest in San Antonio, who “made the decision to move away from a sales-driven culture and become an RIA.” Forrest manages some $250 million in assets and previously was affiliated with LPL Financial.

“The traditional brokerage model hasn’t been able to keep pace with the transformation of our industry toward more transparent, low-cost ways of delivering advice and management,” Forrest said in a statement.

“TD Ameritrade Institutional’s flexible technology and economies of scale allowed us to do more for less and pass along the savings to our clients,” the advisor explained. “Besides, we had already been doing our best to act as fiduciaries. Why not be regulated and recognized as such?”

On Wednesday, TD Ameritrade said its fiscal third-quarter 2011 earnings were $0.27 a share on profits of $157.4 million compared with EPS of $0.30 on profits of $171.7 million in the fiscal second quarter and EPS of $0.31 and profits of $179.4 million in the fiscal third quarter a year ago.


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