TD Bank launches new robot
TD Bank may have a branding issue with its new automated investing service.
The bank this week launched the aptly named TD Automated Placement, billed as its first robot advisor, and TD Plus Automated Placement, a hybrid robot that provides access to a team of human advisers.
With a risk tolerance questionnaire pairing clients with one of seven portfolios made up of ETFs and mutual funds that is automatically monitored and rebalanced, this is a fairly standard entry into a digital advisory market. already crowded. It’s a bit pricey – Automated Investing charges a minimum annual fee of $ 75, which means clients would need $ 25,000 on the account to break even with the standard 30 basis point fee, as pointed out by Gavin Spitzner, president of Wealth Consulting Partners – but otherwise quite in line with the rest of the industry. TD Bank could even be criticized for being so late in the game.
While it’s true that Automated Placement is the first robot owned directly by TD Bank, it is not the first in the Toronto-Dominion Bank’s extended family. TD Ameritrade launched Essential Portfolios in 2016 and raised $ 1.6 billion in assets in June 2020, according to Backend Benchmarking “Robo Report”.
Charles Schwab acquired TD Ameritrade in 2019, and core portfolios are part of Schwab’s digitally advised assets. Prior to the transaction, TD Bank owned 43% of TD Ameritrade. It now owns 13% of the combined company, according to Bloomberg.
It is not known what relationship, if any, TD Bank had with TD Ameritrade’s robotic advisor or whether it recommended the service to bank clients interested in automated advice. TD Bank declined to answer questions and a spokesperson for Charles Schwab said the company did not have data on the number of Core Portfolios clients with a relationship with TD Bank.
If TD wasn’t recommending clients at all, then it’s incredibly late for the digital counseling part. If so, maybe the bank is hoping to bring some of those investors and assets home? From an outsider’s perspective, it looks like TD Bank is at least somewhat trying to replicate what TD Ameritrade has offered. Automated Investments and Core Portfolios offer similar services and are launched with minimum assets ($ 5,000) and identical fees, although Core Portfolios do not include the $ 75 minimum.
New robot advisors are already struggling to differentiate themselves in the highly competitive robot market, but Automated Investing’s positioning can also cause some confusion among consumers, especially those with both TD Bank and TD Bank accounts. Ameritrade. Even some industry analysts are intrigued by the launch of the new product.
” I do not understand very well. I don’t see how it will be differentiated from core portfolios, ”said David Goldstone, head of research and analysis at Backend Benchmarking. “It has to be part of the branding strategy as Schwab looks to strengthen TD. “
As for essential wallets, Schwab has already started a quiet robot sunset. It stopped accepting new clients in March and existing accounts will be converted to the Schwab platform along with the rest of TD Ameritrade, a Schwab spokesperson said.
The company continues to aim for the conversion to be completed within 18-36 months of the transaction closing in October 2020.