TD Ameritrade Institutional, the RIA arm of the custodian and online brokerage, today reported a healthy increase in the number of breakaway brokers for its fiscal 2011, which ended Sept. 30. TDA signed up 348 breakaway practices, according to Tom Nally, managing director of sales, who notes that a practice can be one person or a team of two or more people. That number is up 20 percent from 2010.
The assets that the breakaways brought along with them wasn’t disclosed, although TD Ameritrade reported a record year for net new assets in 2011—$41.5 billion, which includes advisor assets as well as retail clients. Speaking with analysts during Tuesday’s earnings conference call, Chief Executive Fred Tomczyk said that historically the company’s net new assets have split 50-50 between retail and RIAs, but in the last few quarters the mix has moved more to 60-40, favoring the RIA side. Last quarter’s market volatility didn’t seem to affect migration sentiment, he added.
Nally said today that the breakaways are coming from both wirehouses and independent b/ds, although no breakdown was available. What’s driving the movement? Nally said some advisors are troubled by regulatory uncertainty, with the possibility that brokers will be held to a fiduciary standard; if that’s the case, some reason, they may as well start an RIA and work to that standard. Nally says advisors also are getting more questions on the fiduciary standard from clients, and there’s more client demand for it.
Schwab Advisor Services, TDA’s biggest competitor in the breakaway market, recently reported 84 breakaway teams had joined them in the first half of calendar 2011. They brought in net new assets of $5.8 billion, Schwab said; the average team size was $57 million. The total assets in custody for Schwab Advisor Services are $697 billion.