TD Ameritrade Holding Corp (AMTD.N), which has thrived by offering cheap trading to mass-market investors through its discount broker-dealer, is readying a suite of services to attract more money from millionaires, a senior executive said on Tuesday at the Reuters Wealth Management Summit.
"It's one of our top initiatives for 2016," said Tom Bradley, president of the Omaha, Nebraska-based company's retail distribution division. "We think we can do a more effective job of enhancing our offering for folks with $1 million or more."
The decision could make TD Ameritrade more competitive with the growing host of large brokerage firms and family-office boutiques seeking to lure assets from wealthy investors while leaving the "mass affluent" to Main Street firms that offer little personal service.
TD Ameritrade is not abandoning the smaller investor nor offering the same level of attention that full-service firms claim to offer. But when its next fiscal year begins in October, customers who qualify for Private Client Services will be assigned a specific investment consultant, receive routing priority when calling in to place orders, get free access to some investment education programs and qualify for special events that could include seats at professional football games, Bradley said at the summit in New York.
The broker-dealer has not done enough to work with clients "who grew up with us," he said, referring to people who began trading without advice years ago and have subsequently built up substantial nest eggs that they are not keeping with the firm. Out of $2.7 trillion of investable assets held by TD Ameritrade clients, under $400 billion is held with the company. The rest is at banks and large broker-dealers such as Morgan Stanley(MS.N) Wealth Management, Bank of America's (BAC.N) Merrill Lynch, and UBS AG's (UBSG.VX) Wealth Management Americas, he said.
Those companies in recent years have targeted the very wealthy. UBS, for example, says it is interested primarily in servicing people with $10 million or more, and Bank of America's (BAC.N) Merrill Lynch Wealth Management does not pay brokers on accounts with less than $250,000. Merrill Lynch wealth head John Thain told Reuters this week that his brokers need to spend more time seeking business from clients with $250,000 to $1 million, which Wall Street labels as affluent, as opposed to wealthier high-net-worth investors.
TD Ameritrade's Private Client Services (PCS) will focus on millionaire clients who want to make their own investment decisions. That will avoid conflict with the firm's fastest growing business division, which sells products and services to clients of independent investment advisers who want direction on their investments, Bradley said.
Brokers assigned to PCS will work with 100 to 200 clients, as opposed to the 500 that the firm's brokers in branches and at call centers typically handle. All brokers are paid through salary and bonuses, with the PCS bonuses tied in part to retaining clients who are targeted by so many competitors.
Fred Tomczyk, the firm's chairman and chief executive, alluded to the new program last week at an investor presentation. "You need another idea every three to four years," he said. Without giving specifics, he said that brokers at TD Ameritrade's 300 branches will be "moving upmarket a bit and getting more wallet share."
(Editing by Jonathan Oatis)