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TD Ameritrade angers RIAs who feel 'blindsided' after TD Ameritrade's actions prompt the departure of all Vanguard and some iShares ETFs from its NTF platform

The Omaha-based broker's roll-out of new ETF platform also removes Morningstar as ETF-picker as new State Street ultra-cheap fund line-up gets the Vanguard/iShares spoils

Author By Lisa Shidler October 18, 2017 at 9:45 PM
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Justin Castelli: It felt like we were all blindsided.


Stephen Winks

Stephen Winks

October 19, 2017 — 4:24 PM
TDA under Tom Bradley was always reliably a market leader in its support of RIAs. Surprisingly TDA is acting with the insularity of a major wirehouse that is indifferent to fiduciary duty and the portfolio construction responsibilities of advisors utilizing its services. This is in direct contradiction of TDAs hard won leadership in the RIA space. Apparently Scottrade was more of a broker centric firm than RIA centric. I like the old TDA, a terrible rookie mistake. SCW
Tad Borek

Tad Borek

October 19, 2017 — 6:59 PM
But if the trade is "free" it means whoever executes it is making money some other way. Right? Has TD changed since the 2014 Senate hearing where Stephen Quirk testified that orders "virtually always" were routed to the market paying the highest rebate (see NYT piece 6/17/14)? Their stock dropped on recent news of the Mass-AG inquiry into order routing and an FT piece on it said TD banked $83M from routing out of $335M in transaction revenues last quarter (vs. Schwab's $26M). That pays for a lot of "free" trades. Is there any connection between this announcement and the order-routing inquiries? Maybe that's the real story here. I've always been skeptical of free-trade promotions. These aren't charities and they have to pay the salaries and the electric bill - never mind the shareholders. It's like the free toaster for opening a bank account. It's not free, you just paid for it without realizing it. How could TDA do, say, a VTI trade for $0, realistically? There has to be money flowing out of the customer's pocket somehow. I'd rather see it on a ticket and get better routing, if that's what it is. Question from our perspective, of course, is: what's cheaper to our clients, a free trade with hidden costs or a visible commission - which has the potential, but not the necessity, of hidden costs?
Stephen Winks

Stephen Winks

October 20, 2017 — 8:04 PM
Tom, I agree, if its free, it means you are not the client. Unfortunately. retail advice does not play by the same rules as institutional advice, which is why fiduciary duty act acting in the client's best interest is so controversial. The real opportunity for innovation is the creation of a large National RIA that serves as a utility which minimizes trade execution cost like CALPERS fostering a negative trading cost environment and supporting technology and product menu enabling fiduciary duty. SCW

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Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

State Street Wealth Manager Services
Asset Custodian
Top Executive: Marty Sullivan

Consulting Firm
Top Executive: Michael Kitces

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