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Medium-sized event in San Francisco hosts feisty RIAs
September 21, 2010 — 4:34 AM UTC by Brooke Southall
J. Thomas Bradley Jr. arrived at the posh Westin St. Francis Hotel in San Francisco at 1:30 a.m. Eastern Time yesterday.
The big beautiful bed in the nice hotel formed a pleasing image in his mind on the long trip from New Jersey. But as the president of TD Ameritrade Institutional went to lay his head on the pillow, a horrible banging greeted him.
He looked out the window. The noise was coming from a place called Lefty O’Doul’s. He thought: “This can’t be good.”
In fact, he realized, his Union Square nemesis was a street performer with a full drum set, somebody [I can tell you] who is beloved but has robbed this San Franciscan reporter of quiet concentration in the afternoon, and others of a good night’s rest.
Bradley says he was certain that the drummer was under contract of a San Francisco competitor knowing that he had to speak the next day. Indeed, TD Ameritrade convened 250 RIAs right in the backyard of its biggest competitor, Schwab Advisor Services.
While most custodians are content to have a national event once a year and an ‘elite’ event for big advisors, TD does not like to leave a whole coast’s worth of advisors un-convened even for a year. The conference seemed to catch overflow from the custodian’s Florida conference in February without being redundant. See:7 signs that TD Ameritrade’s big conference may be a harbinger of bigger things.
When TD Ameritrade CEO Fred Tomczyk asked people who had attended the event in Orlando, only a smattering of hands went up.
This conference had a big feel to it, partially because its exhibit hall filled two large rooms. In addition, all of TD’s top brass attended, and Ben Stein, the famed actor and economic commentator, spoke and sessions were packed. I ended up standing in the back for InvestmentNews’ head of research Kelli Cruz’s presentation of her company’s new practice management study and fought for a lunch seat when I came 20 minutes late. Adding to the mayhem was the fact that software maker Oracle was having its giant convention at the same Westin St. Francis.
Though it was West Coast regional event for TD, there were advisors attending from all over including Pennsylvania, Indiana, Southern California and Oregon. Most advisors, however, appeared from their hanging name plates to be from within driving range.
Here are some photos of the event provided by TD Ameritrade:
Tomczyk kicked off the event by announcing that TD was the subject of a Barron’s feature over the weekend entitled: Don’t discount TD Ameritrade.. He made a variety of points about TD’s asset gathering, saying it has tripled in three years and that the custodian has $28 billion of net new assets year to date. “We’re still an early-stage asset gatherer,” he said.
Bradley followed him with his bad-sleeping story and then took the brunt of a series of truly challenging questions from RIAs. Gary Strom with Partnervest of Santa Barbara questioned Bradley’s opinion that a fiduciary standard can’t be applied well to brokers. His argument was that most brokers are good people doing their best for clients.
“Harmonization scares me,” Bradley said.
What he meant by this was that harmonization actually just “blows up” both the fee-based fiduciary model and the pure transactional model. The harmony fosters broker-dealers offering RIA-like products without having to act as true fiduciaries and it encourages thick sheaves of disclosures with small print thrown in. Also bad: it throws a wrench into the self-directed discount brokerage model where transactions need to happen without fiduciary oversight. “You don’t want to blow up the commission model,” he says.
The next questioner was a woman who identified herself as a TD prospect. She said she was concerned about Tomczyk’s presentation. She felt like he was promoting TD’s success both as a facilitator of active trading and as a helper of RIAs and she questioned how that seemingly bifurcated message hangs together. Tomczyk and Bradley said that the company merely attempts to give investors choice and that traders should have all the best tools at their disposal.
Another RIA expressed concern that a retail TD branch broker was reaching out to her institutional accounts, and she wanted to know what was being done to prevent that from happening.
The question surprised Tomczyk.
“Schwab has been fighting that [concern about channel conflict from its own branches] for a long time,” he said in a later interview with me. “I had never heard that question [about TD Ameritrade] in three years here.”
Bradley answered the questioner by saying that he hears about the issue only about five times a year from advisors. In virtually every case the client is being contacted because they have or had a relationship with TD on a retail level separate from the institutional account.
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