TD Ameritrade Rolls Out o Shopping Center

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TD Ameritrade says registered investment advisors can now access third-party investment models through its Model Market Center. The center is part of its iRebal trading and portfolio platform and includes products from State Street, Goldman Sachs, WisdomTree, Russell Investments and four other firms.

“There’s been so much interest since our soft launch on Oct. 31. We’ve had more than a third of advisors using the iRebal sign up for this, or 1,000-plus advisors,” said Danielle Fava, director of product strategy and development at TD Ameritrade Institutional, in an interview with ThinkAdvisor.

“The tool means advisors do not have to create portfolios from scratch, representing an important time savings for them,” Fava explained. “And this is only the beginning. Model Market Center is an open-architecture platform, and we expect to add more providers and models over time.”

Like iRebal, TD Ameritrade’s trading and portfolio management technology, the Model Market Center “is a clear differentiator for us,” and represents “a big cost efficiency” for advisors who use it.

“It’s another reason to love iRebal and gain more efficiencies … and thus sets us apart,” Fava said. “It’s an Amazon-like shopping center of third-party models for advisors looking for [portfolio] strategies to offer clients.”

Advisors seem to be coming on board.

“One of the top concerns we hear from advisors is they don’t have the time to create their own models, and yet SMAs can be expensive. So, we like the Model Market Center concept: It’s a good, low-cost alternative, particularly in investment areas where margins are thinner,” said Chuck Ballweg, co-owner of Prosperity Financial Group in San Ramon, California, in a statement. “I’m pleasantly surprised by the lineup of managers in the program: it’s very impressive.”

Game Changer?

While the wirehouses have always had these types of model portfolio programs, the RIA channel has not, according to Fava.

“There’s never been a central location for these advisors to directly access a model at no cost, other than that of using the custodial platform,” she said. “This does separate us from other custodians” by giving advisors further efficiency.

While many RIAs opt to work with third-party turnkey asset management platforms, or TAMPs, the Model Market Center gives advisors model they can download directly into iRebal, according to TD Ameritrade. Advisors can also mix and match elements of the models, which include ETFs and funds.

“It unbundles the TAMP services and gives [advisors] access to portfolio management [services] … for free,” explained Fava, who says advisors only pay for the standard custody and fund management fees.

Advisors using the Model Market Center must do performance reporting, trading and other activities, she says. “Others, though, still could want to fully outsource to a TAMP.”

“Financial advisors had a philosophical shift a few years ago, when outperforming the market ceased to become part of their value proposition, and they began focusing more on complex financial planning and helping clients meeting [broader] goals,” Fava added.

The firm will host its yearly RIA National LINC conference in Orlando from Jan. 31-Feb. 3. 

— Check out What RIAs Are Really Thinking About Now, in 5 Charts: TD Ameritrade on ThinkAdvisor.

The firm makes the move as rivals wait in the wings.

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