TD Ameritrade Institutional Proves Just How Laser-Focused They are on Advisor Technology

If you had any doubt about who the technology thought leader among the major RIA custodians is, the 2018 LINC Conference should have put those doubts to rest. TD Ameritrade just put on what may be the most technology focused conference every devised by a custodian, and it was impressive.

VEO Village, the showcase for TD Ameritrade Institutional’ s technology partners was front-and-center throughout the event. Approximately 80 firms exhibited their technology wares and their integrations with TD Ameritrade. The VEO Village was vibrant throughout the event.

TD Ameritrade, which currently has well over 100 VEO integration partners, and 22 applications integrated into its next generation VEO One platform, continues to be the custodian most open and most supportive of third party technology integrations by far. This fact has not gone unnoticed by the vendors, who uniformly praise TD Ameritrade for their technology support.

Vijay Sankaran, TD Ameritrade’s chief information officer set the tone of the conference almost immediately when he told advisors: “Change or die.” This mantra applies to both TD Ameritrade and the advisors they serve. He went on to tell advisors that you don’t need to be the best or the smartest, but you need to be the adaptable in order to succeed in the current environment.

PROBLEM: ADVISORS SLOW TO EMBRACE CHANGE

Historically, advisors, as stewards of their clients’ wealth, have been slow to embrace change. Sankaran says that firms that are too attached to existing business structures, firms that follow classic market segmentation strategies, and those that worry too much about business cannibalization will be at risk.

Sankaran believes that advisors need to take a more data driven approach to their businesses, and TD Ameritrade is building out tools to help advisors visualize and analyze data to bring new insights to their businesses. Sankaran told me that he would like to apply the same data tools to the third-party applications integrated into VEO One, but there are some data ownership and privacy issues that need to be addressed first. TD Ameritrade is also looking to build artificial intelligence capabilities into VEO One, TD Ameritrade’s next generation workstation for advisors. My guess is that most advisors will be migrated to VEO One by year-end now that it possesses virtually all the features that the old system had, plus many new ones.

SEE WHERE THE PUCK IS HEADED

If you want to get an idea of where TD Ameritrade’s technology initiatives may be going in the future, a look at what the retail side is instructive. TD Ameritrade’s retail side already offers a Facebook Messenger bot, Ted, that leverages artificial intelligences to provide services to retail clients. For example, it can provide market updates, quotes, and even provide round the clock trading on a limited number of ETF’s. If can also address many common customer service requests. TD Ameritrade is looking to bring this technology to the institutional side of the business. One application of the service bot would be for TD Ameritrade to use the bot to improve their service to advisors. Another application might be allowing advisors to make use of the bot technology to service their end clients.

According to Jon Patullo, Managing Director, Technology and Product Management at TD Ameritrade, the new Advisor Client, the client portal for end clients of advisors, will begin rolling out later this Spring. This is really good news for advisors, since the current portal is perhaps one of the few areas of technology weakness at TD Ameritrade. The new portal will sport an improved interface. It will mirror VEO by integrating widgets, including third-party widgets into the site. So, the net result will be a customizable client dashboard that can include financial planning information, portfolio information, trading information and more. The customization aspect of Advisor Client should not be underestimated. It means that advisors will be able to create groups of clients and customize the experience for each group. It will also facilitate service requests. TD Ameritrade will also begin applying the same analytics on the client side that they do on the advisor side. This should enable advisors to better understand how their clients are interacting with the Advisor Client site, so they can further enhance the experience to better meet client needs.

THWARTING CYBER ISSUES

Cyber-security remains a top priority at TD Ameritrade. Bryan Baas, Managing Director Risk Oversight and Controls at TD Ameritrade Institutional, say the firm is investing heavily to stay ahead of the curve at an enterprise level. He says that while fraudulent wire transfer requests are still coming in regularly, advisor education and client education has cut down on successful attacks substantially. The latest threat is apparently fraudulent ACH transfers. As is often the case, a client’s email can be the weakest link. For example, a fraudster can hack a client’s email (or a real estate agent’s email), and then the fraudster inserts themselves into the transaction by providing one of the paying parties with fraudulent ACH instructions. If the fraud is not discovered early, the money is paid out, and then immediately removed from the payee’s account. TD Ameritrade hopes to address these types of fraud by adding new secure communications tools through the client portal. They also plan to build out SMS text alerts so that an end client is alerted and must review and approve a disbursement before it can take place.

MODEL MARKET CENTER

Recently, I wrote about the TD Ameritrade Institutional Model Market Center, and there was strong advisor interest in this new product during the conference. Already, over 1,200 advisory firms are signed up for Model Market Center, and many more are expected to follow soon. Currently, the Center supports 9 managers and 72 models. More will be added on a regular basis. Advisors can filter models by various criteria to identify the most appropriate models for a client or group of clients. Today, most are mutual fund and ETF based. What’s really exciting about the Center is that advisors can implement model portfolios for clients and pay no technology platform charge and no model fee. The only fee the client pays are the underlying expenses of the EFTF’s and mutual funds. In some cases, the total cost of the portfolios works out to between 8 and 10 basis points on average. That is incredibly inexpensive! When you combine that with the power of the free iRebal rebalancing software, you have all the makings of an industry-leading product.

Later this year, Model Market Center will begin enrolling third-party managers who can charge a fee for their models. In essence, they are unbundling the TAMP model. This will allow advisors to tweak models, time tax consequences, rebalance according to their own philosophy, and report using their own software and report packages. It will also allow advisors who have expertise in investment management to list their own models and get paid when other advisors adopt their models.

For a number of years, TD Ameritrade Institutional’ s annual conference has outshone competing custodial and B/D events with the depth and breadth of their technology focus, but this year they have taken it to new heights. They deserve a great deal of credit for a job well done.

Joel Bruckenstein
Joel Bruckenstein
Joel P. Bruckenstein, CFP®, is Publisher of the T3 Tech Hub (formerly the T3 newsletter) and the producer of the Technology Tools for Today (T3) Advisor Conference, the only annual technology conference for independent advisors, as well as the Technology Tools for Today (T3) Enterprise Conference. Bruckenstein is an internationally acclaimed expert on applied technology as it relates to the financial service industry. He is the co-author of three books: Virtual Office Tools for a High Margin Practice, Tools and Techniques of Practice Management, and Technology Tools for Today’s High Margin Practice. Joel’s monthly technology columns appear in Financial Advisor magazine and Financial Planning magazine. In addition, he compiles the annual technology survey for Financial Planning magazine. Bruckenstein has for more than twenty years advised financial service firms of all sizes on improving their technologies, processes and workflows. For more information about Joel Bruckenstein and the services his firm offers, please visit www.JoelBruckenstein.com

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