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TD Ameritrade sells retirement plan custody business to fintech firm

In a bid to focus on its core goal of helping affiliated RIAs grow, TD Ameritrade is offloading its retirement plan custody and trust assets to a fast-growing fintech firm.

Broadridge Financial Solutions expects to have about $420 billion in assets under administration and over 118,000 plan accounts through its mutual fund and ETF trade processing platform, Matrix Financial Solutions, after the deal closes as expected in June. The number of those assets and accounts coming from TD was not disclosed, nor was the purchase price.

“It makes sense,” industry consultant Tim Welsh says of the sale. “If you’re focusing on custody and trading and working with clients on the retail side with individual investors, you don’t want to be distracted from that mission. … Retirement is a total different business with different buyers and different distribution channels.”

TD Ameritrade’s institutional arm will continue to offer retirement plans to RIAs for which it will maintain the sales, service and marketing teams, the firm says. But with the sale, TD Ameritrade expects the business to grow more quickly once it is in the hands of a "scale player."

“After careful consideration, we decided it was the right time to exit a business that will benefit by being in the hands of a scale player dedicated to expanding and investing in this space,” TD executives said in an internal memorandum sent to TD Ameritrade RIAs and obtained by Financial Planning.

TD Ameritrade building photo Bloomberg News
Pedestrians pass in front of a TD Ameritrade Holding Corp. location in San Francisco, California, U.S., on Friday, Jan. 13, 2017. TD Ameritrade Holding Corp. is scheduled to release earnings figures on January 18. Photographer: David Paul Morris/Bloomberg

Tom Nally, president of TD’s institutional arm, Skip Schweiss, president of TD’s trust company and John Newman, the trust company’s managing director, all signed the internal letter.

“We are committed to making this as smooth a transition as possible,” the three executives said.

RIAs selling retirement plans shouldn’t expect the change to impact their day-to-day operations, the firm said in the memo. “It’s business as usual.”

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Broadridge will take over the client relationships of the custodian’s retirement plan custody business, as well as the operational responsibilities for the platform, the firm says.

The sale comes at a time when competitors are scaling their retirement plan businesses.

Pershing launched a new tool last year to improve compliance and oversight of retirement plans. Vestwell, a digital platform for advisors with a retirement plan business, added multi-manager target date model portfolios from Morningstar to its platform earlier this week.

About 6,000 RIAs use TD Ameritrade’s institutional platform, according to its 2018 annual report.

A spokeswoman for the firm declined to say how many RIAs currently use the retirement plans and whether or not pricing will be affected.

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