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 before 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," Tom Nally, managing director of sales at TD Ameritrade Institutional, said 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 clients."
In TD Ameritrade Institutional's RIA sentiment survey, advisors reported that 56% of their new assets comes 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 20% say RIAs offer personalized service and a competitive fee structure.
Seventeen percent report that dissatisfaction with service, advice, performance or fees at full-commission brokerage firms pushes 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," Nally said.
