TD Ameritrade no threat to advisers

I attended the recent TD Ameritrade Partnership 2007 Conference in San Diego.
Our firm keeps client assets under custody at TD Ameritrade Institutional of Jersey City, N.J. Most custodians would consider our firm to be a smaller adviser, though we’re growing at a healthy pace. Our offices are less than a mile from what I suspect is a highly successful branch of Omaha, Neb.-based TD Ameritrade Holding Corp. in a community filled with the “mass affluent.” However, I do not currently participate in the firm’s adviser referral program.
I have met Tom Bradley and the members of his team on a few occasions, though truthfully, none of them could pick me out of a lineup if their lives depended upon it. But I have that kind of impact on many.
Unfortunately, your Feb. 12 article “TD Ameritrade’s Moglia moves to reposition brand” panders to the malcontents. With a conference of this size, there are always a few in every crowd, choosing to accumulate their pent-up anger all year long and unload on management in front of a large group.
Joe Moglia described TD’s program with panache. The reality is that it is providing basic asset allocation models implemented with EFT portfolios to do-it-yourselfers and other types who are really not looking for a financial adviser. It’s a hand-holding approach with minimal consultation.
In a flair for the dramatic, one adviser fretted that Mr. Moglia was creating “the moral infrastructure to become competitive with financial advisers.”
Flamboyant comments such as this make for good press but are simply disingenuous. For the record, real competition is when your own custodian actively solicits account holders who are clients of your firm. (Does this sound familiar?)
For advisers large and small, TD offers tremendous service and support. We truly are partners with TD, but they can’t do everything for us. TD is not perfect — no one is. We have a responsibility to do our part on the investment side, the planning side and, yes, the administrative side. I challenge these malcontents to stop whining and step it up. If they view TD’s approach to the mass affluent as a competitive threat, it’s likely they add little or no value to client relationships and don’t belong in this business. For others considering TD, come on in — it’s a big tent!
Jim McGurren, CPA
Dartmouth Advisory Services Inc.
Garden City, N.Y.

Steering reps in-house a practice that must end
Your March 5 article “Insurers said to steer reps to in-house wares” struck a nerve with me. I was a registered rep for 26 years with a leading insurer, a Court of the Table Million Dollar Round Table qualifier and a top 100 producer with their broker-dealer. To say there was steerage would be an understatement.
I could never understand why mutual fund wholesalers never called on us. We were paid 50% of the dealer re-allowance on outside mutual funds and variable products. Inside funds (proprietary) paid 70%. In addition, only half of the outside funds’ compensation counted toward our contract continuation — a necessity to keeping our benefits. Included in that was a very generous defined benefit plan, health, dental, vision, life, and short- and long-term disability insurance.
After going independent, I realized how much subtle pressure there was to produce the homegrown products. Of course, insurers aren’t the only ones to “encourage” proprietary product. Many firms have lots of proprietary product in their customers’ accounts. I doubt that this is strictly for performance reasons. It has been refreshing to be independent and free from those pressures.
It is a practice that needs to be changed for the benefit of our clients. Thanks for highlighting this.
John Forney, CLU, ChFC
Forney Financial Solutions LLP
Altoona, Pa.

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