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At TD Ameritrade Gathering, Technology, Trusts, Diversity—and Blue Jeans

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TD Ameritrade Institutional’s annual advisor gathering featured well-received addresses by people like Leon Panetta and Magic Johnson and a last-night party headlined by the Steve Miller Band. During the show, held in San Diego in late January, TD made a number of announcements, including four major initiatives.

There was another noticeable change at LINC: All the TDAI executives wore blue jeans at the conference, including TD Ameritrade CEO Fred Tomczyk. Why the sartorial shift? In an interview during the conference, TDAI President Tom Nally said the intent was for the executives to reflect the more casual clothing favored by advisors themselves, and to make those TD leaders “a little more approachable.”

That more casual approachability was reflected in the opening session at the Manchester Hyatt in San Diego with a first for an advisor conference. A packed roomful of attendees (3,300 registrants, TDAI said) using pairs of thunder sticks or drumsticks played along with a drum line on stage that spelled out “LINC,” the conference’s new name (for Learn, Inspire, Network and Collaborate). The attendees enthusiastically participated, so it was appropriate when Nally began his welcoming speech by saying the drumbeat opening was “like an RIA pep rally.” Nally kept in the spirit by first denigrating wirehouses—“their executives want to downplay your success”—while praising the RIA channel as the “only one to gain numbers,” citing Cerulli research.

Nally then announced TD’s four major initiatives, which he and executives like Jim Dario expanded upon in personal conversations.

Diversity by Age and Gender

Following up on his request to have all the advisors in the audience under the age of 30 stand up—there were about 35 of them—Nally said, “We’ve got work to do to promote diversity” and add to the ranks of younger advisors and those studying to be advisors. Only 6% of advisors, he lamented, are under 30.

TD is putting its diversity money where its mouth is by providing two new scholarships for university financial planning students. It’s also providing university grants, notably to Texas A&M University, to develop what Nally called a “top-tier financial planning program” at A&M.

Secondly, the company launched during the conference the RIA NextGen Career Exchange, a free job and resume posting site for RIA firms and job seekers.

Jim Dario, managing director of product management for TDAI, said in an interview that TDAI’s next-gen initiatives are meant to help them “move from student to advisor” and to take advantage of younger advisors’ particular skills that complement older advisors’. “These new folks are trained first” in technology tools and financial planning, while “older folks were trained first in sales.”

Since becoming president of the RIA custodian in 2012, Nally has talked about the importance of diversifying the advisor work force in terms of gender, age, ethnicity and race. “Advisors are starting to understand” the importance of diversity, he said in a private interview. “Years ago, advisors were resistant; they had bad experiences” with younger advisors, but he pointed out that “millennials are the largest living generation—and 40% of them are ethnically diverse.” As for women, “the industry is starting to catch up,” but warned that “big macro trends take time to develop.”

Dario said TD is helping to “create an industry that looks more like the country,” noting that “people want to work with people who look like them and connect to them.”

As for the RIA channel itself, Nally said “it’s the only one to add head count. By 2018, Cerulli says the independent channel will exceed wirehouse” advisors. He cited a McKinsey study showing that while RIAs have only 10% of managed money as of 2014, “they’ll gain 28% over the next four years.” What about the independent broker-dealers? “IBDs are losing their top producers. They’re defensive, fighting this secular trend” toward full independence, and instead are “building closed” systems.

Technology and Trusts

In his opening speech, Nally announced an upgrade to TDAI’s Veo Open Access technology platform. Now called Veo One, it features responsive design for optimal viewing on any device and will allow for a single sign-on to access the applications on Veo. The interface is customizable by the functions and tools of the user. Veo One has been beta tested since late last year by some TD-affiliated RIA firms using five different applications—DocuSign, Laser App Anywhere, MoneyGuidePro, Orion Advisor Services and Redtail Technology.

“There are 64 vendors in Veo Village,” Nally said, referring to the section of the exhibit floors (there were several) where technology firms on Veo were demonstrating their applications, concluding that TD’s open architecture approach to technology reflects the fact that “we don’t put all our eggs in one basket.”

TD promised that more applications will be available this year, including Black Diamond, eMoney Advisor, Finance Logix, Junxure, Laserfiche, Morningstar and Salesforce.com. Nally said that Veo One, the iRebal rebalancing application and AdvisorClient.com, TD’s advisor client Web portal, “will be the triple threat of technology that advisors need.” He said embedding iRebal into Veo “has been a game changer.”

The company also announced that it has entered into a partnership with National Advisors Trust Co. (NATCO), the advisor-founded, nationally chartered trust company, to form Advisors Private Wealth Trust (APWT). Available now, APWT is a corporate trustee offering for RIAs who custody with TD Ameritrade, which will make it easier for those advisors to continue to manage clients’ money in trusts following the death of the primary trustee.

Referring to NATCO, Dario said that “we sought them out” after hearing from its RIAs that they “wanted a TD-branded trust company.”

Advocacy and Robo-Advisors

Regarding its advocacy efforts for RIAs, Nally said in his speech that the company has had “10 years of advocacy against the broker-dealer exemption” while also supporting the Financial Planning Association’s lawsuit against the SEC. While he admitted that there was “a limited appetite for action in these areas” currently in Washington, Nally vowed that TD Ameritrade would stay “focused and vigilant” on advocating for the fiduciary standard. In the interview, however, Nally said he’s not sure that a fiduciary standard for all advice-givers “will happen anytime soon.” He said there’s been “an evolution in thinking” about the fiduciary standard, noting that at TD’s Fiduciary Summit last fall, “some people said we might want to abandon the effort” because of the possibility that a watered-down fiduciary standard might instead be implemented by the SEC. However, he said that “as long as you have inherent conflicts of interest in the business model, you can’t put the clients’ interests first.”

Robo-advisors are “a wake-up call” to advisors that they’ve “got to move faster” in changing their business and pricing models by using technology that is “married to personal service.” Dario said flatly that “there will be pressure on fees,” forcing advisors to “price to those value-added services” they’re offering clients. His suggestion to human advisors? “Embrace the technology” that robo-advisors are offering. “You can be more efficient using that technology,” perhaps segmenting clients and using tech tools to “touch them more often.”

“There will be a return to financial planning,” Dario predicted. “This year,” he said, the robo-advisor conversation among advisors has moved from “’It doesn’t apply to me,’ to ‘This is a threat,’ to ‘This is an opportunity.’”