TD Ameritrade Institutional has been the beneficiary of the breakaway broker trend as advisors flock to independence amid continuing regulatory worries.

On Thursday TD Ameritrade Institutional, a division of TD Ameritrade, Inc., announced that it raked in 260 breakaway brokers in the first three quarters of fiscal year 2011, a jump of almost 20% year over year.

TD Ameritrade believes the trend has been driven by brokers looking to become independent registered investment advisors prior to a slew of regulatory changes that will most likely affect the brokerage industry.

“The fee-based fiduciary business model of independent RIAs is attractive to brokers who want to be proactive and don’t want to sit back and wait to see how a rewrite of the fiduciary rule and other pending regulatory changes might impact their livelihoods,” said Tom Nally, managing director of sales, TD Ameritrade Institutional, in a press release. “Because RIAs already operate as fiduciaries, brokers at traditional full-commission firms foresee fewer regulatory challenges and fewer conflicts of interest in the independent model, which can be good for business and good for clients.”

TD Ameritrade Institutional’s RIA Sentiment Survey revealed that advisors report that 56% of their new assets are coming from traditional full-commission brokerage firms.

Advisors see becoming an RIA as a good business move. Twenty percent of advisors say clients choose RIAs because they are required to offer advice that is in the best interest of clients, while another 20% say RIAs offer more personalized service and a competitive fee structure. Seventeen percent report that dissatisfaction with service, advice, performance or fees at full-commission brokerage firms push clients toward RIAs.

“Advisors we talk to are focused on taking control of their futures. They want the freedom to do what’s right for their clients, choice and flexibility in investment options and the potential financial benefits associated with becoming an independent advisor,” said Nally. “Going independent by establishing a firm or joining an existing RIA is a preferred path for advisors, especially as more investors turn to the independence and objectivity of the RIA model for help managing their wealth.”




Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access