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TD Ameritrade to Transition $35 Billion in Retirement Plan Assets to Broadridge

Once the deal closes, Broadridge’s Matrix subsidiary will become one of the largest independent service providers of custodial and sub-custodial solutions with about $420 billion in assets under administration and more than 118,000 plan accounts in custody.

TD Ameritrade has agreed to sell its retirement plan custody and trust assets to Broadridge’s Matrix Financial Solutions, the firm’s mutual fund and ETF trade processing platform for the retirement industry. The deal would make Matrix one of the largest independent service providers of custodial and sub-custodial solutions with about $420 billion in assets under administration and more than 118,000 plan accounts in custody.

Skip Schweiss, president of TD Ameritrade Trust Company, who’s responsible for TD Ameritrade Institutional’s retirement plan solutions platform, said the company is selling its unbundled retirement plan service, where it acts as custodian to record-keepers, a business it’s been in for over 20 years. That encompasses about 10,000 retirement plans and $35 billion in assets.  

“That model works well for advisors who are real experts in the field, and they know how to put those parts together,” Schweiss said.

TD introduced a bundled offering, where it provides the record keeping and custody in one solution, about five years ago.

“That’s a model we’ve found great buy-in from advisors on, so we’re keeping that business line,” Schweiss added.

Advisors like the simplicity of choosing just one vendor and having the TDA brand servicing the plan.

TD Ameritrade serves about 7,000 registered investment advisors, about 10% of which are active in the retirement plan space.

"[Advisors] will now also have access to more than 25,000 funds and a wider option of record-keepers," said Cindy Dash, general manager and senior vice president, Matrix Financial Solutions, Broadridge. "This will allow them to deliver a more customized product to their plans that best serve their retirement plan needs. This comes at a time when there is increased need for retirement plan customization, and we look forward to delivering innovative specialty services to help clients grow and remain competitive."

Christopher Donat, equity research analyst with Sandler O'Neill + Partners, said the change could pose some risk to advisors whose assets will move to Matrix.

“For the end client, anytime there’s change, it raises questions, and it requires the companies to communicate more,” he said. “Sometimes the questions lead to follow-on questions about pricing or something else that are not always desirable. So there is some risk when you have a transition like this.”

In an analyst note, Peter Heckmann, senior research analyst at D.A. Davidson & Co., said the acquisition was consistent with other tuck-in deals Broadridge has done, and he estimates a purchase price below $100 million. Broadridge has used such tuck-in deals to augment its organic growth and cross-sell to existing customers.

Relatedly, Wells Fargo recently sold its institutional retirement and trust business, which serves 7.4 million customers across $827 billion in assets, to Principal Financial Group for $1.2 billion. The acquisition doubles the size of Principal's record-keeping assets, making a juggernaut in the retirement space even larger, while diversifying its client base. More than two-thirds of Wells Fargo’s institutional retirement assets are in midsize employers' plans ranging from $10 million to $1 billion, according to Principal.

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