Interactive Brokers Sees Custody Opportunity Following Schwab-TD Merger
As Charles Schwab absorbs TD Ameritrade, broker Interactive Brokers sees the opportunity to work their way into the front ranks of the RIA Guard.
The company’s executive vice president of marketing and product development Steve Sanders (pictured) told Citywire that Interactive Brokers have long struggled to position their RIA platform alongside those offered by Fidelity, Schwab and, more recently, Pershing.
“We’ve been trying to do this for years. None of these in my mind are that cheap, offer so many products and the technology is definitely not that good, ”he said.
What was missing in the past was brand recognition among AIRs. A nice growth spurt the platform has enjoyed since the start of 2020, he said, indicates that advisers could finally look beyond the horizon presented by the old “Big Four”.
Sanders said Interactive Brokers are benefiting from a migration of former TD advisers looking for new housing, dissatisfied with their employer’s Schwab digestion.
“Maybe they’re not getting the customer service they should be getting, maybe it’s just too big, or maybe they’re starting to charge them a fee they don’t want. not pay, ”Sanders said.
Interactive Brokers’ RIA platform consists of a custodian, CRM, trading platform and portfolio manager. Advisors registered in the US and international markets use the “Pro Advisors” segment, which now has $ 41 billion in assets under management with 5,570 advisors.
Sanders said the pandemic – and the volatile market it has sparked – has led to more new applicants around the world, and the wave of brokers, advisers and traders breaking up wire houses to go it alone. also helped.
Interactive Brokers, which is more widely associated with flexible online brokerage services, is not the only newcomer vying for a seat at the RIA custodial table. Banking holding company Axos Financial invested $ 55 million in the space when it bought the custody business of E * Trade in April. Goldman Sachs recently entered the RIA custody game, with the help of its acquisition of Folio Financials.
Financial planning guru Bob Veres noted in an April message on Michael Kitces’ Nerds Eye View blog that the Schwab-TD marriage presents a clear opportunity for “custody alternatives” that could trigger a binge eating.
“The merger that seems to decrease competition in the RIA conservation space could end up increasing it, ultimately bringing more advisors and assets to alternative platforms, whose cultures are better suited and whose the scale could increase dramatically over the next two years, ”Veres wrote.