The RIA custody business is clearly a growth business and the firm had to make sure to protect that franchise, Nally explained.
“And our legacy in the retail space has been delivering great technology solutions for people who want to be empowered and in control, and that’s where we figure we’ll be laser focused on competing,” he said.
“What we’re not going to do is play the role of advisor. There are people who want to retain in control who may want some advice along the way. [But] if somebody says, this is too complicated for me, I don’t feel confident in doing this, I need someone to do it for me, [that’s] where we hand it off to one of our RIAs,” he said.
And that’s where an RIA with a robust wealth management offering can meet the need.
But the breadth of financial issues RIA firms are handling today has brought into focus how they charge. TD officials have been outspoken about the need to consider models other than AUM pricing.
So far, though, the AUM model dominates. “It’s one of those things where everyone is entrenched in their existing model,” Nally said. “But I think over time we are seeing people starting to explore.”
A survey of TD’s top-performing firms found a high percentage of them charged minimum fees, have separated financial planning fees from other types of fees and showed “an appetite for billing on total net worth rather than investable assets,” Nally said. “If you think about it, advisors are being pushed to do more and more things for their clients, so why are you billing on only one component of that value proposition?”
The more services advisors add—and they’ll have to in order to compete--the more it’s going to require them to look at the ways they price, Nally said.