UBS Asset Gathering Conference March 21, 2011 LEADING FOR THE FUTURE Meeting New Challenges in Wealth Management Tom Bradley, President TD Ameritrade Institutional This material is designed for an investment professional audience, primarily Registered Investment Advisors (RIAs). TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. 2011 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
Disclosures This presentation is provided for informational purposes only. Options involve risks and are not suitable for all investors. TD Ameritrade Institutional does not encourage RIAs to direct their clients towards options trading, RIA clients and the RIAs themselves should carefully consider the risks of options trading, and options compatibly or conflict with investment goals, before determining if options activity is to take place. Please read the provided copy of Characteristics and Risks of Standardized Options booklet before trading or investing in options. Access to third party providers in the Application Program Interface (API) program is provided solely as a service to financial advisors using the brokerage, execution and custody services of TD Ameritrade Institutional. Since we must ensure that all vendors meet our stringent security requirements, integration with new vendors is not immediate and cannot be guaranteed. Participating providers are independent and are not employees or agents of TD Ameritrade. TD Ameritrade does not guarantee nor are they responsible for the quality or accuracy of any provider's product or service. In no instance should the listing of a provider be construed as a recommendation or endorsement by TD Ameritrade. Furthermore, TD Ameritrade does not recommend or endorse any security described by any provider. Access to Veo and the services presented is provided solely as a service to financial advisors using the brokerage, execution and custody services of TD Ameritrade Institutional. TD Ameritrade and third party companies named in the presentation are separate and unaffiliated and are not responsible for each other s policies or services. TD Ameritrade is not responsible for third party information or services, including market data provided by the exchanges. TD Ameritrade does not make recommendations or determines the suitability of any security or strategy. Past performance of a security or strategy does not guarantee future results. Third party research and tools are obtained from companies not affiliated with TD Ameritrade, and are provided for informational purposes only. While the information is deemed reliable, TD Ameritrade does not guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with respect to the results to be obtained from its use. irebal products and services property of ThinkTech, Inc., an affiliate of TD Ameritrade, Inc. 2
The Wealth Management Industry is Growing Total US Market Sizing Assets Under Professional Management ($T) (1) 2009 Advisor Managed Retail Assets: $10T (2) $55 $50 $45 5.7% CAGR $43 $46 Wirehouses 40% $35 $25 $23 $23 $21 $25 $40 $39 $37 $35 $35 $30 $31 $28 Bank & Insurance B/Ds 10% IBD 15% Regional B/Ds 16% RIAs and Hybrids 19% $15 2000 2002 2004 2006 2008 2010E 2012E 2014E 1 Includes professionally managed retail and institutional assets. Source: Cerulli Quantitative Update - The State of US Retail and Institutional Asset Management. 2 Source: Cerulli Quantitative Update Retail Investor Product Usage. 3
Independent Registered Investment Advisors (RIAs) Fast Growing Segment of Wealth Management RIAs State-Registered or Registered with the SEC Proudly adhere to a Fiduciary Standard Believe in a Fee-Based Model TD Ameritrade Institutional among Competitors (1) Second-largest RIA client base with over 4,000 advisors Third-largest RIA asset base, representing one-third of TD Ameritrade s total assets 1 Source: Cerulli RIA Service Agent Survey 2Q10. 4
The RIA Industry Is Thriving Independent RIA Model Gaining Assets Client Asset Growth: RIA Retail AUM vs. Wirehouse Retail AUM 40% +39% 20% 35 pts 0% +4% -20% 2005 2006 2007 2008 2009 2010E RIAs Wirehouses Sources: Cerulli State of the Wirehouses Nov 09, RIA Service Agent Survey Q2 10, Advisor Metrics 2010 Update. RIAs include dually registered advisors. 2010E represents estimated results based on industry publications, public filings, and TD Ameritrade internal analysis. 5
RIAs: Core to TD Ameritrade s Multi-Channel Strategy Independent RIAs Serve HNW Clients Who Are Seeking Advice Investor Needs TD Ameritrade Solutions High High-Touch, High-Cost, Customized Advice Institutional support of RIAs Client Touch Self-Directed Packaged Products Low-Cost, High Tech Web, branch, phone Amerivest and ETF offerings Self-directed portfolio management tools/solutions Low Personalization High Source: Financial Planning: The Delivery of Advice and Guidance (Cerulli); TD Ameritrade Internal Analysis. Amerivest is an investment advisory service of Amerivest Investment Management, LLC, an SEC-registered investment advisor, available to RIAs on a sub-advisory basis. Brokerage services provided by TD Ameritrade, Inc. TD Ameritrade, Inc. and Amerivest Investment Management, LLC are both wholly owned subsidiaries of TD Ameritrade Holding Corporation. Amerivest is a trademark of TD Ameritrade IP Company, Inc. Risks applicable to any portfolio are those associated with its underlying securities. For more information please see the Amerivest Disclosure Brochure (ADV Part II). 6
RIAs Are Continuing To Grow More RIAs are Adding and Retaining Clients RIAs Seeing Growth in Clients RIAs Seeing Loss of Clients +21 pts 60% 71% -12 pts 50% 18% 9% 6% Market Trough May 09 Last Year Dec 09 Current Nov 10 Market Trough May 09 Last Year Dec 09 Current Nov 10 Source: Results are based on surveys conducted May 14-22, 2009 ( Market Trough ), Dec 4-16, 2009 ( Last Year ), and Oct. 21-Nov. 4, 2010 ( Current ) by Maritz, Inc. on behalf of TD Ameritrade Institutional. Maritz, Inc. and TD Ameritrade Institutional are separate, unaffiliated companies and are not responsible for each other's products and services. Survey question was Overall, in the past 6 months have you seen growth, loss, or no change in the total number of clients? (Base: Total Respondents.) 7
RIA Needs Practice Management Support A Constant Dialogue with Dedicated Solutions Consultants RIA s Vision: We start with the advisor s unique needs Solutions Consultants: Average tenure of 11 years in the business Roadmap Process: 10,000+ business recommendations delivered to over 1,300 advisors 12-Mo Organic Growth Rate (1) 19% 9% Dedicated Support: Total team of 40 associates dedicated to Practice Management Roadmap Users Other Advisors 1 Identify Needs 2 Establish Goals 3 Develop a Plan 4 Implement the Plan Real Business Solutions 1 Based on analysis of FY10 net new assets at TD Ameritrade relative to beginning of period assets. Populations: Advisors receiving Roadmap recommendations vs. other advisors on TD Ameritrade platform. Access to Roadmap is provided by TD Ameritrade Institutional as a service to financial advisors using the brokerage, execution and custody services of TD Ameritrade Institutional. TD Ameritrade does not guarantee nor is it responsible for the completeness or accuracy of the data provided by third-party firms or for the quality of any third-party firm s product or service. 8
RIA Needs Integrated Tools and Technology Full Integration Increases Time Spent with Clients All Tools Integrated 52% Most Tools Integrated 35% A Few Tools Integrated 34% No Tools Integrated 13% Tools Financial Planning CRM Performance/Client Reporting Portfolio Mgmt System Portfolio Analytics Proposal Generation Advisor Workstation Market Data and News Trading/Order Mgmt Compliance Systems Account Aggregation Source: The Value of Technology Integration for Registered Investment Advisors: Making Time for Clients and Prospects, Aite Group, September 2009. 9
RIA Needs Integrated Tools and Technology New Way to Leverage Technology Open Access V E O O P E N A C C E S S CRM CRM CRM CRM CRM CRM FinPlan FinPlan FinPlan FinPlan FinPlan FinPlan Advisor Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Rebalance Rebalance Rebalance Rebalance Rebalance Rebalance Documents Documents Documents Documents Documents Documents A Growing Network of Third-Party Providers 10
RIA Needs Integrated Tools and Technology Veo Mobile for ipad For illustrative purposes only. 11
RIA Needs Human Capital Management Advisor Education Center Account Services Client Acquisition in a Wired World Client Acquisition Through High Net Worth Client and Prospecting Events Client Web Admin Consolidated Positions Continuity Planning Doing More With Less Effective Communication and Process Equity Block Orders Fixed Income Tools Fixed Income Research and Commentary Form ADV Part II How to Buy or Sell a Bond How-To Guide on Buying Non-Verbal Buying Signs Options Block Orders Portfolio Rebalancing Private Charitable Foundations Quality Execution Redefining Poor Performers Strategies for Successful Transitioning Succession Planning Tax Center Using Client Feedback to Build Your Business For illustrative purposes only. 12
Maintaining Our Focus on Advisor Satisfaction Vision: To Be the Better Investment Firm for Today s Investor and Advisor Client Satisfaction Net Advocate 95% 75% 75% 90% 91% 70% 65% 85% 60% 55% 80% 78% 50% 49% 75% J F M A M J J A S O N D J F M A M J J A S O N D 45% J F M A M J J A S O N D J F M A M J J A S O N D 2009 2010 2009 2010 Scores are based on a 3-month rolling average. CSI is based on 11 point scale, that is, from 0 to 10, top 3 box = 8+9+10 rating points. Net Advocate is based on [10+9 ratings] [0+1+2+3+4+5+6 ratings]. Results for Legacy TD Ameritrade and Legacy Fiserv Trust Company combined November 09 and forward. 13
Looking Ahead to Future Challenges New Regulatory Winds Blowing Fiduciary Standard Oversight DOL Advice Rule (Proposed) Advocating for client interests Contributing to industry organizations Sharing helpful information 14