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TD Ameritrade saw 95 breakaway brokers sign up last quarter, bringing average initial assets of $30 million each to the custodian platform, Chief Executive Fred Tomczyk said today after the parent company reported record revenue and record new client assets. The number of breakaways, mostly individuals plus a few teams, was up 36 percent from a year earlier, he told Registered Rep., but it fell within a range that the company has seen for several quarters now. There was a mix of advisors from the wirehouses and independent broker/dealers, but the trend was edging toward more b/d advisors making the move, he said.
“The wirehouses have had pretty strong handcuffs on their brokers for a while,” he said.
“It’s a long sales cycle. What you’re seeing right now is the ones from the IBDs, with whom we’ve been working for the last three to six months, are starting to come to fruition.” TD Ameritrade now has 4,500 to 5,000 RIAs on its platform, he said. Does he think he can break last year’s tally of 284 breakaway FAs for fiscal 2011? “I think it’s a little early in the year to make that call, but it would be nice.” The breakaway pipeline remains healthy, he added. During a conference call with analysts, Tomczyk said the firm’s institutional channel is growing twice as fast as its retail channel.
While he doesn’t see anything “substantially different between the major players in this space,” Tomczyk said TD is getting “very good feedback” on its technology platform, VEO. The company has worked with vendors to provide an open and flexible architecture so advisors can use their own programs with ease. “Where a lot of other firms tend to offer a package that’s unique to them, we have much more of an open philosophy where we’re working with a number of popular vendors to tie in to us,” he said.
Investors who returned to the market in greater numbers last quarter helped boost TD Ameritrade’s bottom line. Average client trades per day reached a record 439,000, up 16 percent from a year earlier. The company had record net new client assets of $11.5 billion, up 13 percent, and total client assets of $412 billion, also a record. TD Ameritrade had second-quarter net income of $172 million, or 30 cents a share, on record net revenues of $718 million. Profit was up 5.6 percent. The company doesn’t break out the assets custodied for its RIA business.
Charles Schwab Corp. last week also reported sharply higher profits on more active investor activity. Both companies continued a trend of renewed investor interest that was seen in the last quarter of 2010.