TD Ameritrade Institutional Breaks It Down for Breakaway Brokers
TD Ameritrade Institutional Breaks It Down for Breakaway Brokers
New Report Sets the Record Straight on the Myths and Realities of Becoming an RIA in Today's Business Environment
JERSEY CITY, N.J.--(BUSINESS WIRE)-- TD Ameritrade Institutional1, an established leader in helping advisors transition to independence, debunks common myths and arms advisors with facts about the realities and benefits of becoming an independent registered investment advisor (RIA).2 TD Ameritrade Institutional provides information and guidance for breakaway brokers in a new report titled, "The Myths and Realities of Becoming an RIA: Know the Facts Before Making a Move".
"We've been supporting breakaway brokers through the decision-making and transition process for several years and have developed a deep understanding of advisors' personal and professional considerations," said Scott Collins, director of hybrid and advisor transitions, TD Ameritrade Institutional. "It can be an emotional decision to leave a familiar business environment and start down a new path. In this new report, we've taken what we've learned from working with hundreds of advisors and identified the most common misperceptions. This resource provides clarity and can help advisors become better informed about their options."
Myth #1: My practice isn't large enough to become an RIA
Reality: Advisors choosing to make a move span asset and production levels and typically fit an "entrepreneurial" mindset. The RIA industry has seen a major influx of advisors either starting or joining an RIA firm. In fact, since 2004, the number of RIAs has increased 38 percent, while the number of fully affiliated (wirehouse) advisors has decreased by 16 percent.3
Myth #2: The transition is too hard and I will lose clients and revenue
Reality: While moving from one firm to another firm or channel is a big commitment, most advisors have very successful transitions and client loyalty remains high. Advisors transfer over 90 percent4 of targeted assets when leaving their existing firm.5
Myth #3: I won't grow client assets the first year after I transition
Reality: Growth potential is high; 73 percent of advisors experienced an increase in the number and quality of referrals within their first 10 months.6 And RIA market share grew 35 percent between 2007 and 2011, while wirehouse market share decreased by 13 percent.7
Myth #4: I will have to give up my securities licenses and commissionable business
Reality: Advisors may choose a "hybrid" model which enables them to maintain their licenses while still being independent, giving them the ability to do both fee and commission business.
Myth #5: If I go independent I may make less money and lose my retirement plan
Reality: With industry averages for overhead expenses in the 40-45 percent range, advisors typically net a 55-60 percent payout after overhead expenses8, which is double the typical wirehouse payout illustrated in TD Ameritrade Institutional's new Myths and Realities of Becoming an RIA report. Advisors also have the opportunity to build business equity that might be monetized upon retiring.
Myth #6: I will not have access to robust technology as an RIA
Reality: Industry analysts and advisors feel the technology available to independent advisors rivals what is available for wirehouse representatives given the focus on the needs of RIAs in recent years.9
Myth #7: I won't have access to a broad range of investment products
Reality: By becoming an RIA, advisors have the ability to select the products most appropriate for their clients. Asset custodians often work with RIAs to add new investment vehicles to their product lineup.
Myth #8: I won't be able to grow as an RIA without a big Wall Street brand-name and budget
Reality: Establishing a brand or leveraging the brand of an existing RIA has benefits as consumer preferences are shifting.10
Myth #9: It will be cumbersome and difficult for me to establish an RIA
Reality: Unlike a decade ago, the resources available to advisors now are vast. Custodians like TD Ameritrade Institutional have systems, processes and people to help advisors pursue their vision for independence.
Richard Kolb JD, CPA, CFP®, a managing partner at Integrys Wealth Advisors of Illinois, recently made the move to become an RIA. Kolb and the Integrys team manage more than $340 million in client assets with a focus on financial planning and wealth management. "TD Ameritrade Institutional's transition team made the goal of becoming an RIA more attainable by guiding us step-by-step throughout the process," said Kolb. "We were looking for more control over the business and culture, better access to technology and the ability to service our clients' best interests. As an independent RIA we feel we can provide clients an even better experience and really focus on accelerating our growth."
Along with providing information around common misperceptions, TD Ameritrade Institutional makes the goal of becoming an RIA more attainable through a step-by-step, guided approach that can help take the guesswork out of the process. TD Ameritrade Institutional's Bridge to Independence program serves to simplify and ease the transition for financial advisors looking to start their own RIA firm, join an established RIA or operate as a hybrid advisor.
TD Ameritrade Institutional provides guidance through four phases:
1) Choose a path. Financial advisors have options to consider when choosing how they will set up their business. TD Ameritrade Institutional lays out options for advisors starting a new RIA firm or joining an established RIA firm and also helps hybrid advisors find a broker-dealer to support or transition a commission business. Financial advisors can get insights on the potential financial advantages of going independent, creating a strong business plan and timing a transition.
2) Plan - Business structure and setup. TD Ameritrade Institutional provides financial advisors with expertise and support for a wide range of business needs including staffing, setting up technology and investment platforms, compliance and insurance, even office furniture and phone systems.
3) Transition. TD Ameritrade Institutional's experienced Business Transition Services team has transitioned thousands of advisors. The team assists with handling account and asset transfers, client communications, and other logistics, and helps the account transfer process go according to plan.
4) Grow - Manage the business for success. TD Ameritrade Institutional provides ongoing practice management services which include access to educational materials and expertise in the areas of technology, staffing and compensation, client service, operations, business management and strategic planning.
"Going independent doesn't mean going it alone. The RIA industry has matured and there are more choices and flexibility available to RIAs as an increasing number of technology and service providers focus their attention on the growing independent advice channel," added Collins.
TD Ameritrade Institutional's Bridge to Independence support services include:
Relationship Managers - An experienced team of professionals who are dedicated to helping advisors who are making the transition to independence, whether that is starting up a new firm or joining an existing firm.
TD Ameritrade Institutional RIAConnect™11 - Advisors looking to join an existing RIA firm will be introduced to established RIA firms with proven capabilities to support their business objectives.
Business Transition Services Team - Dedicated service group to help advisors develop a plan to transition their clients to their new firm and simplify the account transfer and paperwork requirements (minimum asset requirements apply).
Webcasts, Whitepapers and Case Studies - Guidance from advisors and industry experts on transitioning to the RIA model. †
Perspective paper: The Myths and Realities of Becoming an RIA: Know the Facts Before Making a Move
Perspective paper: Becoming an RIA? Should You Consider Going Hybrid?
Webcast: The 4 Essential Steps to Becoming an RIA
Webcast: Becoming an RIA: The "Aha Moment"
Webcast: A Pathway To True Independence: Joining an Established RIA
Webcast: Making Independence Happen: Join an Established RIA
Case Study: Independence from a wirehouse to an RIA
Visit www.exploringyourindependence.com to learn about starting or joining an independent RIA. For more information about transition support, visit www.tdainstitutional.com/goRIA or call 800-444-6100.
For more information about TD Ameritrade Institutional, please visit www.tdainstitutional.com.
For updates and news, visit www.TDA4advisors.com, follow us on Twitter @TDA4Advisors and connect on LinkedIn.
About TD Ameritrade Institutional
TD Ameritrade Institutional1 is a leading provider of comprehensive brokerage and custody services to over 4,500 fee-based, independent registered investment advisors and their clients. Our advanced technology platform, coupled with personal support from our dedicated service teams, allows investment advisors to run their practices more efficiently and effectively while optimizing time with clients.
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade's (NYS: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 36 years. An official sponsor of the 2016 U.S. Olympic Team, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information.
Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org)
1TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.
2TD Ameritrade Institutional has established itself as a leader in supporting breakaway brokers and has helped more than 1,000 advisors become RIAs since 2010, more than any other custodian. Based on publicly available and anticipated reports for Fidelity Investments and Charles Schwab.
3Cerulli Quantitative Update, Advisor Metrics, 2012
4Cerulli Quantitative Update, Advisor Metrics, 2012
5Actual results may vary
6 Experiences of Advisors in Transition, REP. Magazine, April 2012
7Cerulli Quantitative Update, Advisor Metrics, 2012
82011 InvestmentNews/Moss Adams Adviser Compensation and Staffing Study
9Advisor GrowthStrategies, April, 2013
10ByAllAccounts, 4Q11 HNW Investor Study
11Access to the TD Ameritrade Institutional RIAConnectTM program is provided by TD Ameritrade Institutional as a service to financial advisors using the brokerage, execution and custody services of TD Ameritrade Institutional. TD Ameritrade does not guarantee nor is it responsible for the completeness or accuracy of the data provided or for the quality of any product or service. TD Ameritrade makes no warranty or representation with respect to the service as to suitability or fitness for a particular purpose. In no instance should the listing of a third-party be construed as a recommendation or endorsement by TD Ameritrade.
Webinars are provided for general information purposes only and should not be considered an individualized recommendation or advice. TD Ameritrade makes no representations or warranties with respect to the accuracy or completeness of the information provided.
Advisors have not received remuneration for participation in providing testimonials. Advisor testimonials may not represent the experience of all advisors using TD Ameritrade brokerage services. The advisors mentioned are independent and not affiliated with TD Ameritrade Institutional. More information about the advisors is available on the SEC website (www.sec.gov).
† Please note that by clicking on the hyperlinks provided you will enter an unaffiliated third-party Web site to access its products and services. The third-party site is governed by its posted privacy policy and terms of use, and the third-party is solely responsible for the content and offerings on its Web site.
AMTD-G
TD Ameritrade Holding Corporation
Kristin Petrick, 402-574-6569 (Office)
Cell: 402-218-9813
Communications & Public Affairs
kristin.petrick@tdameritrade.com
@TDAmeritradePR
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