TD Ameritrade CEO Tim Hockey received a roaring round of applause from advisors Thursday morning after promising them that the brokerage firm is “not going to try and compete in the same space as RIAs.”
Noting that TD’s leadership has been setting a “new course, to clarify and define” a new strategy, Hockey detailed during his opening keynote remarks at the National LINC event in San Diego where the institutional business and RIAs fit in.
TD Ameritrade’s legacy in the retail space “has been to enable self-directed investors through technology. We have an unmatched set of tools for the investor who is empowered to manage their own money and trade and invest on their own, and for those who want to hand over the reins, that’s where you come in,” Hockey said.
TD believes “RIAs are the best solution for those individuals and families who want and need a comprehensive relationship. The bottom line: we’re not going to try and compete in the same space as RIAs,” Hockey said. “You offer a range of services to clients that quite simply we’re not going to try to emulate. We’re not on a path the build the capabilities that you do. Rather than competing for the same clients, we’re focusing on accelerating your ability to serve more clients, better.”
Stated Hockey: “If someone walks into one of our branches and is looking for the holistic services and relationships that you provide, we’ll refer that client to an RIA — full stop.”
That said, TD will “continue to empower investors to take control of their financial lives,” Hockey continued. “We are going to build tools for the investor who wants to stay in the driver’s seat. When we play to our strengths and you play to yours, we both win. Your success is our success.”
After hearing from a handful of RIAs about what they need from TD Ameritrade, Hockey said “the message that came through loud and clear is: Don’t compete with me. We’ve been ambiguous about this in the past. … Our strategy is clear, we will not compete with you.”
Tom Nally, president of TD Ameritrade Institutional, added that it’s not just about referrals, “it’s about the critical strategic importance of the institutional business to TD Ameritrade, which drives us to continue to make the right investments for individual success for you, your clients and for us.”
Things that are in the works, according to Hockey: TD Ameritrade is the founding member of a new U.S. equities exchange, called Members Exchange. “We’re working with eight of the other leading financial institutions to launch this exchange, with the goal to improve transparency, reduce costs and simplify the execution of U.S. equity trading, which will be beneficial for institutional and retail clients,” Hockey said.
Other members of Member Exchange include Bank of America Merrill Lynch, Charles Schwab, Citadel Securities, E-Trade, Fidelity Investments, Morgan Stanley, UBS and Virtu Financial.
After being among the first financial services firms to offer approved clients with access to Bitcoin futures contracts last year, TD Ameritrade Holding Corp. announced in early January that it made a strategic investment in ErisX, a regulated derivatives exchange and clearing organization that will include digital asset futures and spot contracts on one platform.
“We all know crypto is a very fast-moving space, so this investment gives us a seat at the table,” Hockey said Thursday. “We want to make sure that we represent the interest of investors and advisors as these platforms and currencies evolve and mature.”
Another launch is an internal innovate incubator — Discotech, which stands for Disruptive Companies and Technology.
Nally also pointed to some trends as noted in recent FA Insights studies. For instance, technology continues to be the biggest investment for advisory firms followed by marketing and compliance. Nally warned, however, that advisors must be trained on how to use the technology.
Also, there’s been a “big uptick in investment management outsourcing,” according to FA Insights, he said.
Advisory firms are also continuing to serve an aging clientele. “It’s absolutely critical that you are replacing aging clients with new generations of clients,” Nally cautioned.
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