One of the big three RIA custodians is ramping up one of its platforms on several fronts, with more offerings and a second kind of managers.
| Danielle Fava|
TD Ameritrade Institutional
Director of Innovation
Last week, the TD Ameritrade
team turned on tier two for their Model Market Center
, confirms Dani Fava
, director of innovation for TD Ameritrade Institutional. TD officially unveiled the upgrade yesterday. Watch for the TD Ameritrade Institutional team to continue to add more managers and strategies to the platform; it now includes 328 strategies from 35 third-party firms (up from 67 models from eight firms, at launch), and 3,200 individual users at RIAs have used the platform so far.
"We're going to continue to add models," Fava tells MFWire
TD's Model Market Center is not like a select list, Fava clarifies, as the TD is "not doing qualitative analysis on the models." Instead, they simply check that the model and strategies meet the platform's minimum requirements: GIPs compliance, minimum track record of five years, AUM minimum of $250 million, PM education requirements, and the like. There's also a commercial agreement for getting on the platform, Fava confirms.
The Model Market Center
, which TD launched
two years ago, started off with a single tier, now called tier one, with models from strategists who charge no management fees because the models include products proprietary to those strategists as underlying investments. Now, the new tier two gives TD-affiliated RIAs access to open-architecture model managers, which means they charge strategist fees ... to the RIAs.
"We had to build a billing system," to launch tier two, Fava says. "The advisor pays for the model. It doesn't hit the end client's account."
Now that RIAs have hundreds of models to choose from on the platform, the TD folks have teamed up to help advisors differentiate between all those models.
"We have integrated a third-party software tool called FinMason's
'model impact tool,'" Fava says.
FinMason assigns a risk score to each model, from one to 100, and advisors can fill in the particulars of a client's situation to "look at potential outcomes for that individual client across all of the model market center models," Fava says.
For tier two managers, the TD team has connected the Model Market Center to another third-party ally, informa's PSN
"One of the things we learned from tier one ... [is] having managers input all of their information is too much," Fava says. That's where informa's PSN comes in with tier two. "We are utilizing their data to fill in the model market center."
The informa partnership also gives TD-affiliated RIAs access to the 13-page WealthIQ
reports for each tier two model on the platform. Watch for TD to add that capability for tier one down the line.
So far, tier one of the Model Market Center "has been gaining great adoption," Fava says. She sees a big opportunity here, in part because of how the platform is different from traditional TAMPs. With Model Market Center, managers just provide research, while the RIA handles trading and the like.
"The advisor retains the only fiduciary role ... The client doesn't have to sign any paperwork," Fava says. "It is a completely advisor-driven solution."
The trend in the marketplace, Fava says, is that "generating alpha is not the advisor's value proposition." Yet most RIAs still continue to "go it alone" instead of using third-party strategists.
"The traditional managed account space is kind of in opposition to some RIAs' philosophy," Fava says. "RIAs are fiercely independent ... They want choice and they want control."
Thus, TD's Model Market Center allows RIAs to pick and choose which models they want, blend those models with each other or with the RIAs' own custom models, while keeping control of trading and handling tax loss harvesting.
"At the same time, they can save some time from doing the model creation because that's not where their value proposition is," Fava says.
The Model Market Center launched with eight firms: Anchor, Cambria, CLS, GSAM, Russell, SSgA, Wilshire, and WisdomTree. Since then, the TD team has added a host of other strategists (some tier one, some tier two), including: Advance Capital Management
, AGFiQ Asset Management
, Anchor Capital Advisors
, Anfield Capital Management
, Aptus Capital Advisors
, Auour Investments
, Cabana Asset Management
, Capital Market Consultants
, Clark Capital Management Group
, Eagle Ridge Investment Management
, Efficient Market Advisors
, First Trust Portfolios
, Global X
, Horizon Investments
, Invesco Advisers
, J.P. Morgan Asset Management
, Julex Capital Management
, KKM Financial
, Meeder Investment Management
, Miller/Howard Investments
, Northern Trust Investments
, Redwood Investment Management
, Russell Investments
, Schafer Cullen Capital Management
, W.E. Donoghue
, and Zacks Investment Management
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