TD Ameritrade is developing a plan to return fees to investors whose portfolios lose money, the company confirmed Thursday.
The policy would be similar to one launched by its competitor Charles Schwab Corp. in December.
TD Ameritrade is planning to offer a refund of fees to clients who use the company’s Amerivest managed account portfolios, one of TD Ameritrade’s investment products, if the products lose money for two consecutive quarters.
The fees for Amerivest managed accounts are between 3 basis points and 125 basis points of assets, charged annually. A spokesman for TD Ameritrade says no budget has been set aside as yet and it is not known how many refunds the firm might be dealing with. The details of the program have right now not been announced.
The Schwab program launched last year is known as an accountability guarantee. It offers a return of fees to managed account clients who are unhappy for any reason. Schwab has had about 550 requests for refunds to date, which is 0.2 percent of eligible accounts, says Michael Cianfrocca, a Schwab spokesman.
“Our accountability guarantee is much broader than the TD Ameritrade plan and offers refunds to a client who is unhappy for any reason,” Cianfrocca says. “It gives us a chance to have meaningful conversations with clients and allows us to build trust.”
When the program was announced, Charles R. Schwab, the founder and chairman of Charles Schwab Corp., said, “Accountability means delivering advice in a way that puts clients’ needs first, encouraging clients to engage with us in the investing process, openly discussing the reason for investment recommendations, being clear about costs and fees, continually asking for feedback and making things right when needed. It means we stand behind what we say and what we do.”