TD Ameritrade argues that the NTF shake-up offers "an expanded, more diversified program" for advisors, by increasing its sector and commodity coverage, and adding extremely low-cost core exposure from State Street's new SPDR Portfolio ETF rebrand. (See: "State Street Debuts Low Cost ETFs”)
"We regularly engage with our clients, and they’ve told us they wanted more commission-free ETFs," said Joseph Giannone, senior manager of Institutional Communications for TD Ameritrade.
DuQuesnay agrees, but "the unfortunate thing about this botched announcement is that it overshadows the positive aspect of the new funds that were added," she noted.
"From what I see, the ETFs they're adding are more sector-based or tactical than how we typically run our portfolios," said Clint Thomas, co-founder and principal of Greenwood, Colorado-based Integrity Wealth Solutions. "We're still evaluating right now, but for us, it's not a great change."
Advisors Planning For Switch
Already, advisors are weighing the best approach on how to adapt.
"To make a wholesale change with our portfolios, especially on the taxable side, is pretty much out of the question, because of the tax gains we've seen this year," said Thomas. "But we'll have to evaluate where we go from here for our tax-deferred accounts and our new clients."
For now, however, he's considering sticking with the funds he already has. "Over the long term, a $6.95 [commission fee] is pretty irrelevant," compared to expense ratios, he said.
DuQuesnay, meanwhile, is most concerned with how this will affect her smaller clients.
"When clients have small accounts, we purposely create a portfolio with fewer investments that do not have trading costs. This allows us the flexibility to rebalance more often and keep more cash invested," she said. "We will need to re-evaluate our small account models, as well as the breakeven points for our other models."
Contact Lara Crigger at [email protected]