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E-Trade is sending client referrals to RIAs — which firms will make the cut?

E-Trade launched its Advisor Network this week, a program that will send the company’s investors to financial advisors at RIAs on their platform — but which firms will be chosen for the referrals?

Thus far, only two RIAs affiliated with E-Trade’s custodian channel have been selected: Edelman Financial and Mercer Advisors.

“[These RIAs] have low attrition numbers in terms of the clients that already work with them,” says Matthew Wilson, senior vice president of institutional services at E-Trade.

E-Trade building exterior

Both firms also have experience working in other advisor referral programs, he notes. Custodians like Schwab and TD Ameritrade already have their own programs.

E-Trade plans to grow the number of RIAs involved, and already has a few more firms in the pipeline, says Wilson. However, not all 200 RIAs on their custodial platform will be chosen to participate in the new network.

Wilson says E-Trade is looking for firms spread out across the country, and wants to include both national and regional RIAs in its network.

E-Trade also wants RIAs that offer a wide variety of client services and have advisors with diverse specializations, Wilson adds.

For firms that do make the cut, the referrals could be substantial. E-Trade has 4.9 million brokerage accounts and 1.7 million stock plan accounts, according to the company. To join the program, advisors will have to pay a fee that will start at 23 basis points, according to Wilson.

In the days since launching the program, the feedback has been positive, says Wilson.“We’ve had tremendous feedback both from our clients working with our financial consultants at the branches, and both [RIAs],” he says.

E-Trade says the new network will be able to provide financial planning services beyond what the company currently offers. It expects this will attract new customers and improve attrition of existing clients.

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