TD Ameritrade Institutional executives, in Las Vegas for the firm's annual conference, have got their swagger back this year after spending last year's event sounding contrite. And that's because the firm's RIA clients are happy and asset flows are coming back.
In his conference-opening remarks, Tom Bradley, president of the Jersey City, N.J.-based asset custodian, indicated that satisfaction among TD Ameritrade affiliated RIA firms is back up to over 80 percent from 30 percent in August of 2007. That low score, according to Bradley, was related to turmoil resulting from the merger between TD Waterhouse and Ameritrade that closed in January of 2006. "Last year we apologized, but we said we'd have laser focus in getting back to historical levels," Bradley said in his speech.
Meanwhile, TD Ameritrade Holding Corp. reeled in $8 billion in net new assets for the fourth quarter—one of the strongest quarters in the company's history. Noting these results, Bradley could not resist a poke at Wall Street: "Remember when client prospects would say, ‘I want to go with somebody a little more solid—like Bear Stearns or Merrill Lynch,’" he quipped to a laughing audience of RIAs.
In an interview, TD Ameritrade President and CEO Fred Tomczyk said he attributes the turnaround in RIA satisfaction and asset flows to improvements in service. "At the rate we were losing assets 18 months ago there was no way we were going to be asset gatherers," he adds. "It's starting to come back. It's amazing how asset gathering correlates with service levels."
One sign that RIAs are back in the TD camp is that the firm's Partnership 2009 conference itself is booming. The exhibit hall is humming with 1,500 attendees, including 900 RIAs, a number that matches last year's attendance at the same event—back before the market and the economy had fallen off a cliff.
Two RIAs eating lunch in the Caesars Palace ballroom on Thursday said they decided to come despite the terrible, tax-season timing of the conference and the Las Vegas location—which they don't care for much.
Of course, RIAs still have some concerns. Tomczyk, who was named CEO in October, says he arrived a day early in Las Vegas to meet with clients and hear their biggest concerns. One issue raised was how to get better returns on cash balances. RIAs have an average allocation to cash of 17 percent, up from 7 percent in past years. Meanwhile, RIAs' fixed income allocation has jumped to 28 percent from 17 percent last year, Bradley says.
But TD Ameritrade is reluctant to make new money market products available if they require greater risk or longer duration to generate higher yields. "We don't want to make that mistake again," says Tomczyk. "We won't stretch for yield."