Although financial advisors using the platform may outsource their investment management, they still retain control over other aspects, including when to implement the model and how often clients’ assets should be rebalanced.
“This is a hybrid approach where the advisor doesn’t have to do it themselves anymore, but they also don’t have to give up control,” said Danielle Fava, director of financial technology product strategy at TD Ameritrade Institutional.
Prior to TD Ameritrade’s introduction of the Model Market Center, financial advisors could dig up individual mutual funds and exchange-traded funds and create their own asset allocation models.
Alternatively, an advisor could outsource everything to a “turnkey asset management program,” or TAMP, pay a fee and then share their fiduciary responsibility. In that case, advisors also give up control over how to manage the assets.
The Model Market Center is available for free to financial advisors who custody-assets with TD Ameritrade. More than 1,000 have signed on since the platform’s soft launch on Oct. 30, 2017.