Deals & People February 7, 2012

TD Ameritrade Appoints President

Tom Nally was appointed president of TD Ameritrade Institutional, the firm’s business unit serving independent registered investment advisers (RIAs).  
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Nally will replace Tom Bradley, who will become TD Ameritrade Holding Corp.’s president of retail distribution. Bradley is taking the position of John Bunch, who resigned from his position as president of retail distribution effective February 10 to take the top leadership role at an investment advisory firm.

Nally has been with the company since 1994 and served as a 12-year veteran of Bradley’s management team. He most recently oversaw all aspects of the business unit’s sales. He and his team were responsible for developing new RIA relationships and delivering practice management solutions that assist RIAs in achieving their strategic business objectives.

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Nally has held a variety of positions for the firm and has had responsibility for trading, fixed income, adviser relations, client service, adviser technology, account services and operations serving the independent RIAs who custody assets with TD Ameritrade Institutional.

Nally will also join the company’s senior operating committee, a group of senior executives who are responsible for the strategic direction and decision-making at the company. The executives report directly to Fred Tomczyk, president and chief executive officer.

 

Data & Research February 7, 2012

Study Finds Decreasing Numbers of Provider Changes

Retirement plan sponsors who conduct marketplace reviews with finals presentations are 55% more likely to remain with their current provider today than they were as recently as four years ago.  
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According to survey data from Anova Consulting Corp., for the sales situations in 2011, 28% of mid-large market searches with between $20MM and $500MM in plan assets resulted in the plan sponsor remaining with the incumbent recordkeeper, compared to 18% in 2007. This figure does not include non-competitive re-bid situations, which are an increasingly commonplace alternative to a full search/RFP process for plan sponsors who are not necessarily dissatisfied with their provider, but conduct periodic due diligence reviews for fiduciary reasons.

“With the difficult economic environment of the past few years, most companies are more focused on their core businesses than with evaluating their 401(k) plans,” said Chris Cumming, senior vice president at Great-West Retirement Services. “Consequently, there’s been a slowdown in RFIs and RFPs, which leads to fewer finals situations, and even then sponsors have been more likely to remain with the incumbent.”

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According to the plan sponsors, retirement plan advisers and consultants interviewed, one driving force behind this trend is the increasing commoditization of 401(k) product and service offerings in the mid-large market.

“As fee spreads compress and open investment architecture, state-of-the-art technology and customizable participant communications are offered by more competitors, sponsors are increasingly unwilling to undergo the uncertainty and additional effort of a conversion,” said Richard Schroder, president of Anova Consulting Group. “Results from the plan sponsor research we’ve performed over the past decade show a drop-off in provider changes due to core product offering differences—client service issues are now a key catalyst for provider changes.”

“At Putnam, we’re seeing sponsors look to improve service delivery, or take advantage of innovation that didn’t exist three-five years ago,” said Edmund F. Murphy II, managing director and head of Defined Contribution at Putman Investments. “There is clearly a growing market demand for providers to deliver maximum value to plan sponsors and an enhanced participant experience that leads to higher savings and better retirement preparedness.”

Great-West has observed a similar trend in the mid-large market. "When sponsors conduct a finals process and switch recordkeepers, they are looking to upgrade their overall plan with the latest features and sophisticated investment capabilities while achieving a competitive price point," Cumming said.

Another driver of the decline in 401(k) provider changes is sales-related. Failure to differentiate is a frequent sales process critique among bids lost prospects who elect to remain with the incumbent. "In an increasingly competitive marketplace with a finite amount of deal flow, sales teams really have to bring their 'A' game to win the business," suggests Schroder. "Before entering a finals presentation, I would urge any sales team to identify four or five ways in which they are different from the competition and articulate them during the presentation."

Patrick Murphy, managing director and head of sales at New York Life Retirement Plan Services, added, "A 'me too' approach is not effective in sales finals presentations. Plan providers have to develop products and services with differences that are truly meaningful to plan sponsors. Those providers who can demonstrably add value and have an impact on plan results will be the winners going forward."

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