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TD Ameritrade's raised its NTF fee to mutual funds and analysts believe rivals may hike theirs, too

Schwab and Fidelity have ample leverage with mutual funds to raise their toll, analysts say

Author Brooke Southall April 14, 2010 at 6:13 AM
no description available
Matthew McGinness: It would not be surprising to see the toll go up.

Nick Gerber


Bob Ellis

Stephen Winks

Stephen Winks

April 14, 2010 — 1:46 PM

Because of breakthroughs in technology and portfolio construction, composite portfolio performance reporting incorporating all a clients holdings is now available to all. From the perspective of the consumer, the advisor and that of a fiduciary, managing accountability, cost, transparency and performance can be achieved far less expensively than a very narrowily focused mutual fund platform which affords little or no holdings transparency. A new generation of investment vehicles and portfolio construction and management technology is about to (1) cut out redundant account administration cost at the manager, client and trustee level that add no value, (2) make it possible to electronically manage and extraordiniary degree of investment and administrative values for an unlimited number of unique custom client portfolios at (3) a fraction of the cost of a mutual fund, while (4) providing the advisor 50% more in compensation.

Trying to win market share by cloning the old mutual fund supermarkets simply makes you competitive using decades old technology. By embracing innovations in portfolio construction technology and investment vehicles (real time buy/sell manager research and overlay management) custodians like TD Amertirade can (1)make continuous comprehensive counsel required for fiduciary standing possible, (2)make advice a process the advisor manages (asset/liability study, investment policy, portfolio construction and management with an audit path to statutory documentation to assure fiduciary standing)rather than a product which brokers sell, (3) greatly elevates the role and counsel of the advisor (4) definitively serves the best interests of the consumer and (5) increases advisor productivity by 50%.

Given we are at the tipping point where advice is not longer incidental to trade execution but trade execution is incidental to advice, the industry is in need of leadership, not just the cloning of outdated platforms based on a different time—where fiduciary standing was not possible. Leadership is advancing transformative innovation rather just keeping up. That is what made Schwab a market leader and is what will again reorder the industry.


Skip Schweiss

Skip Schweiss

April 16, 2010 — 4:54 PM

To say that many no-load “funds have steep 12b-1 fees that load funds do not carry…” is incorrect, Mr. Southall. Virtually all load funds carry a 12b-1 fee, usually 25-35bp. To be considered a “no load fund”, the fund cannot have a 12b-1 fee greater than 25bp.

Brooke Southall

Brooke Southall

April 16, 2010 — 5:15 PM

Hi Skip,

Thank you for clarifying that point. Sorry bout that and I’ll make the change in the article.


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Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

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