Aiming for $1B in AUM, portfolio manager bolts TD Ameritrade for TCA

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A portfolio manager and RIA with $300 million in assets under management is changing its custodian in an effort to grow the firm more than threefold over the next three years, its president says.

Nepsis’ technological expertise and its new relationship with Trust Company of America make Mark Pearson’s $1 billion goal viable, he said this week. The fee-only, Minneapolis-based firm is moving its assets to TCA’s platform from TD Ameritrade Institutional over the next three to six months.

Pearson’s firm follows at least one other former TD Ameritrade firm, SEM Wealth Management, in leaving the custodial giant for its smaller competitor. E-Trade Financial’s announcement in October of its agreement to purchase TCA for $275 million caused Nepsis to reach out, says Josh Pace, CEO of TCA.

“It is the first evidence in a substantive way of a halo effect of being acquired by E-Trade,” says Pace, who will remain atop the firm after the deal closes in the second quarter. “There are so many advisors on the move, and we need to be part of those conversations. So E-Trade really elevates our profile.”

Pace’s firm has already helped Nepsis, whose name comes from a Greek word meaning “ultimate clarity,” with its rebranding, according to Pearson. Nepsis removed the phrase “capital management” from its name, built a new website and started new podcast and Facebook Live shows.

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In turn, the third-party money manager brings its experience to TCA of using Salesforce’s customer relationship management software for scale. A client support team of three full-time staffers and a fourth part-time employee handle Nepsis’ $300 million book of business, Pearson says.

He would be surprised, he says, if the firm has to hire even two more support staff members during the push to $1 billion in AUM due to the automation now built into its CRM process.

Nepsis had been an early adopter of TD Ameritrade’s Salesforce’s tech, according to Pearson. The firm saw a drop-off in the quality of the custodian’s services over the past year and a half after joining its platform roughly 10 years ago, he says.

“It was a much different company, to me, at the time,” Pearson says. “That relationship wasn’t the same. As I looked at TCA, it reminded me a lot of the old TD Ameritrade.”

TD Ameritrade spokesman Joe Giannone declined to discuss Nepsis’ departure, noting the firm doesn’t comment on its clients or its business relationships.

“What I can tell you is that for more than 25 years we have worked to deliver exceptional service to advisors,” Giannone said in an emailed statement.

“Our value proposition is resonating in the marketplace, as reflected in the many advisors who come on to TD Ameritrade’s platform and trust us with their client assets, and we constantly seek opportunities to enhance our offerings and deliver a better experience.”

Nepsis has about 35 advisors and solicitors, who bring in the majority of the firm’s business by pitching outside advisors from other RIAs and broker-dealers. The firm’s investing approach combines technical strategies with behavioral finance and psychology.

TCA’s assets under custody have hit $19 billion in 2018 after starting the previous year around $15 billion, according to Mike Lover, the firm’s senior vice president of key accounts. The custodian’s affiliated firms have about 7,500 advisors, according to Lover.

E-Trade CEO Karl Roessner called the TCA deal a very solid acquisition on the firm’s fourth-quarter earnings call, telling an analyst that the firm’s executives “absolutely see upside” from the purchase. Roessner has met with a half dozen or so of TCA’s largest RIAs, he said.

“I really like what I see from the offering, from the individuals I went to go meet these folks with and from the compliments we received from the RIAs who are on the platform themselves,” Roessner said.

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Clearinghouses/custodians RIAs Asset management CRM systems Recruiting Josh Pace TD Ameritrade Trust Company of America Salesforce E-Trade Financial