| NEW YORK
NEW YORK Feb 1 TD Ameritrade Holdings
is partnering with Mercer, the employee benefits consultant, to
try to narrow its wide gap against competitors in managing
Americans' nest eggs as they enter retirement.
Under a new agreement that has not been publicly announced
but was confirmed by both companies, Mercer is beginning to
recommend TD Ameritrade to people in Mercer-administered 401(k)
plans who want to transfer their assets to Individual Retirement
Accounts or other investment accounts when they retire.
A Mercer spokesman also said the benefits consultant chose
TD Ameritrade as the preferred broker for its entire suite of
401(k) rollover services.
Mercer, which administers about $81 billion for about 1.3
million people in 261 corporate retirement plans, used to
provide the brokerage service directly.
The companies declined to discuss other aspects of the
relationship, including any compensation Mercer may be receiving
TD Ameritrade is hoping that the arrangement will help it
close a big gap with its rivals, such as Fidelity Investments
and Charles Schwab Corp. They both have big businesses
supplying mutual funds and other products to 401(k) plans,
giving their brokerage units insights into when people may be
ready to seek help converting employee-run accounts into
investments they more directly control.
TD Ameritrade does not have a platform for 401(k)s because
it does not manage proprietary funds.
"Retirement is a hard gap to fill in," TD Ameritrade Chief
Executive Fred Tomczyk said in an interview at the firm's annual
conference for independent investment advisers in San Diego.
"We've decided not to go there the direct route."
A few years ago the online broker considered using some of
its cash surplus to buy the retirement plan business of State
Street Corp but passed because of the high price tag,
The arrangement began last year but it is still too soon to
gauge progress, a TD Ameritrade spokeswoman said. The
Omaha-based online broker also hopes to carve out arrangements
with other 401(k)-plan administrators, she said.
Tomczyk was candid, however, about the difficulties of
making such arrangements work. They are labor-intensive beyond
initial negotiations because a plan administrator must embed the
TD Ameritrade option within every plan and educate participants
about the option
"It's worth a try," Tomczyk said.
With a flood of Baby Boomers nearing retirement, retirement
accounts are a major focus of retail brokers and investment
advisers. IRAs are the fastest growing channel in the retirement
market, fed by rollovers from 401(k) plans. About $4 trillion
now resides in 401(k) accounts compared with $5 trillion in
A major theme at the TD Ameritrade conference for the
4,000-plus independent advisers who use its services was to
encourage them to get more involved in helping small companies
set up retirement plans. The broker's trust company, which is
not involved with the Mercer venture of the company's retail
brokerage, helps coordinate plans with only about 50
participants holding average balances of about $80,000 per
Separately, TD Ameritrade officials said that customers are
getting more engaged in equities markets. The company, which
earlier this month said that commission-generating trends were
growing compared with December, is expected to announce that
daily trades in January were up more than 10 percent from the
average of the previous three months.