Smaller custodian will seek to democratize consulting advice on behalf of smaller advisors

December 21, 2009 — 4:14 AM UTC by Brooke Southall


TD Ameritrade is pouring resources into its practice management division, aiming to expand even more into a line of business that has always been the provence of Schwab Advisor Services.

The third-largest custodian will announce how it plans to revamp and build on its momentum as a burgeoning consultancy at its 2010 Partnership conference in Orlando on Feb. 3-5.

TD was able to provide free reports to about 700 of its larger RIAs in 2009 but it wants to expand the program to include many more of its 4,000 custody clients.

The expansion plans center on ways of creating more of a do-it-yourself model with the aid of technology, says Brian Stimpfl, managing director of advisor advocacy and industry affairs for TD Ameritrade.

Difficult to scale

“It’s going to be difficult to scale to 4,000 RIAs” without adding a self-service capability, he adds.

Having a team of consultants who can help advisors run their businesses better has always been a good way to attract, retain and grow RIA practices. Schwab was first to recognize this, and has a team of 100 consultants on staff who do just that. Fidelity and TD Ameritrade trailed.

Then, Jersey City-based TD began building its business five years ago and has taken its program from 40 consulting reports in 2004 to about 700 firms and 2,500 separate reports in 2009.

It’s hard to compare custodians’ programs directly, but in some ways TD’s practice now rivals Schwab’s.

Schwab has consulted about 930 advisors through practice management-related events through October 2009. These are smaller and more intimate sessions the company conducts around the country, according to the company.

Schwab’s technology consultants have conducted more than 240 in-depth business operations consultations during the past three years.

540 per year

Schwab consultants, who include technology and business consultants, relationship managers, and managing directors, have provided one-on-one personal advice to more than 1,600 clients and prospects over past 3 years, an average of around 540 per year. Schwab’s business consultants have conducted more than 400 engagements over the past 2 years.

More than 1,750 advisors have engaged in its annual RIA Benchmarking Study, and approximately 3,000 advisory firms have used its Online Technology Adoption Scorecard to track tech adoption in their firm.

Both Schwab and TD Ameritrade tend to provide consulting services to their biggest accounts or other large RIAs that show a promise of delivering more assets. Because of the manpower involved, it has not yet proven economical for these firms to help smaller advisors — something TD hopes to change because of its success with larger ones.

TD says its consulting clients experience a fourfold jump in net new assets and a doubling of new client accounts, when compared to the prior six months.


“We were dumbfounded by how quickly the results made themselves clear,” Stimpfl says. It’s not lost on TD Ameritrade that RIA growth translates directly to success for his firm.

Still, the program relies on perseverance, says Tom Bradley, president of TD Ameritrade Institutional in a prepared statement.

“The success of this program is the result of a powerful structure of goal-setting, follow-up
and follow-through,” he says.

TD gave two case studies of custody clients applying consulting advice:

• Iron Capital Advisors, a firm that manages $4 billion of assets, reduced the time dedicated to rebalancing and fee processing from 24 hours to 4 hours per quarter

JNBA Financial Advisors, which manages $290 million of assets, is now adding $48 million in net new assets. The company did not specify a time period in its release.

The consulting advice is having a magnified effect right now. Many RIAs spent much of the last two years handholding clients and performing manual tasks formerly performed by staff like rebalancing portfolios and taking phone calls, according to Stimpfl.

“It’s what they had to do,” he says. “It’s what circumstances called for. There was a joy in reconnecting with the nuts and bolts of making the business run.”

But now financial advisors need to return their attention to running their business in a thoughtful, forward-looking fashion.


“There is no time like now for advisors to focus on coming out of this economic turmoil and get introspective on how to improve their businesses,” he adds.

Fidelity Institutional Wealth Services is ramping up on consulting based on a similar rationale.

“We have recently increased our focus on practice management because we believe these efforts can help RIAs become better business managers in tough economic times,” says Steve Austin, a spokesman for the Boston-based asset custodian. He adds that Fidelity is making “dozens” of inside and outside consultants available, with an emphasis on human resources, M&A and marketing.

For its consulting practice, TD Ameritrade created a tool that borrows form the design of methods used by Wikipedia. It is an online library of knowledge solicited from the people who are being served.

Its consultants can use it to quickly tap the expertise gathered in serving other custody clients, Stimpfl says.

Top goals that advisors ask for help in achieving include: business growth, productivity, employee satisfaction and reducing business risk.

For now, RIAs do not have access to this tool, except through a consultant. TD’s goal is to create a self-service version of the tool over the next three years.

One advantage

Custodians maintain one advantage in the consulting business that other providers in the industry may not rival, said Timothy Welsh, principal of Nexus Strategy of Larkspur, Calif.

“They’re in a position to aggregate best practices,” he says. Welsh, whose firm helps companies to market to RIAs, declined to comment further because he is helping one custodian to develop its consulting practice.

The addition of good consulting to good service adds up to great service, according to Michael Nathanson, CEO of The Colony Group in Boston, which is a customer of both custodians.

Schwab’s “edge” over Fidelity in day-to-day custody service is relatively minor, Nathanson said in an earlier interview. Its gains a palpable advantage by providing consultative services. For example, Schwab provided Colony Group with compensation information to set pay for employees.

It also provided a consultant who created a report for improving Colony’s use of technology — expanding the universe of what a custodian will provide, he added.

“That’s what they mean when they say 'great service,’” Nathanson said in the interview.

Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

Nexus Strategy
Consulting Firm
Top Executive: Timothy D. Welsh

Share your thoughts and opinions with the author or other readers.


Dan Edwards said:

December 21, 2009 — 7:25 PM UTC

Tell me more. I usually direct my rollover clients to your platform for my advisery services.

Await your reply and more about the new service…


Dan Edwards
Prism Fund Solutions, Inc.
Registered Investment Adviser (RIA)
Accredited Investment Fiduciary ® (AIF)
Professional Plan ConsultantTM (PPC)
Paladin Registry 5 Star Advisor
1679 Watermark Circle, N.E.
St. Petersburg, Florida 33702
727-580-6006 cell


Elmer Rich III said:

February 16, 2013 — 2:37 AM UTC

Is it just me or is anyone else a bit skeptical of custodians morphing into consultants, M&A advisors, tech enablers, etc? Where is the knowledge base, intellectual property, practice experience and seasoned leadership going to come from for all this?

It seems like there is plenty of profitable growth in the plain old custodian business.

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