Canadian-owned TD Direct Investing is the fourth largest direct platform by assets.
TD previously had a 50 per cent joint venture with Natwest Stockbrokers, including the Royal Bank of Scotland share dealing services, from 2002 but took the opportunity to acquire the remaining interest in July. Existing clients who elect to stay will be on the TD Direct Investing platform from October. This will give a substantial boost to TD Direct Investing’s assets under administration which will rise to approximately £13bn across a client base of somewhere in the region of 300,000.
In a sector where the scale players have a competitive advantage in terms of technology development and marketing budgets, this deal puts TD Direct Investing in the bulge bracket of direct platforms. TD Direct Investing head John Tracy says scale provides “the ability to serve customers better and that is where the focus is.” He cites customer service, mobile, web and quality of information as some of the areas where they will continue to invest.
The mobile strategy is in response to customers asking for convenience and ways to interact. TD has a nice simple portfolio and trading app for iPhone and now an iPad app since July.
TD has a strong stockbroking heritage both in the UK and through their American cousin TD Ameritrade, but it has worked hard over recent years to target the much larger consumer segment of “investors” as opposed to “traders”.
The RDR has been a catalyst to bring funds into the fold and they are currently the asset class growing most strongly. TD established a clean pricing model earlier than required by the regulator with a 35 basis points platform fee. This was later reduced to 30bps in April after competitors had declared their hands in the run-up to the implementation of the platform policy rules.
Cash is another area where their banking parent could provide a competitive advantage and they have access to savings products from TD Bank NV in the Netherlands. At the other end of the scale international trading options are good with access to 17 markets.
TD sees a clear path to growth as the D2C channel expands and feels the mass market is the under-served opportunity. Tracy says “we serve everyday people”, and as a result he does not expect TD Direct Investing’s growth to come from pinching competitors’ clients.
However, serving this demographic is likely to require more guidance on the website. This is going to be a challenge on what is primarily a trading platform. Like others, TD was pleased with the recent FCA paper on guidance but it will need to make this a priority to get real engagement from the masses.
Jeremy Fawcett is head of direct at The Platforum