Ask Tom Bradley to look back at pivotal moments that shaped the advisory business and he recalls May Day 1975, the day the Securities and Exchange Commission deregulated commissions. “Two industries came out of that [deregulation]: discount brokerage and the independent registered investment advisor business,” Bradley said.
During his 30 years at TD Ameritrade, in which he’s steered both the retail and institutional businesses, Bradley has watched two major trends unfold: the role technology has played in reshaping the investor/advisor relationship, as well as investors “flocking” to what he calls the “newer” advice model—fiduciary, fee-based advice.
“We’ve gone from a straight-up ‘Call us and we’ll write up a trade ticket’ to what is being referred to today as omni-channels; you can still call us [and] walk into a branch,” Bradley said, but clients can now go online or use a mobile device to do business with TD Ameritrade. In fact, mobile is “one of our fastest growing channels,” he said, representing more than 15% of TD Ameritrade’s daily trades.
Bradley said the discount broker’s two fastest growing businesses are around the advice channel. “We have folks that like to trade, but we also have folks who are more long-term investors.” The firm offers two products and services for each—TD’s advisor referral program, AdvisorDirect, as well as Amerivest, which provides investment portfolio management solutions for the mass affluent.
AdvisorDirect, through which TD refers high-net-worth investors to registered investment advisors, launched in the mid-2000s and now refers $30 billion in assets to RIAs every year, Bradley said. “The asset close rate is in the 25% to 30% range,” with the average account size being more than $1 million.
Amerivest, TD’s investment portfolio management solution for the mass affluent, which serves individuals with at least $100,000 to invest, currently measures about $11 billion in assets—“that’s up from $2 billion only a few years ago,” Bradley said.
Amerivest, TD’s “fastest growing business,” is the “closest thing” TD has to a robo-type service offering, Bradley said. The second fastest growing is the discount broker’s independent advisor services business.
The original Amerivest “was purely do-it-yourself online, and we built it up to $1.5 billion or $2 billion and the growth kind of petered out,” Bradley said. When TD “involved our investment consultants […], the growth shot up—that’s how we got to $11 billion today.”