July 21, 2015

Via Electronic Mail and Regular Mail

Office of Regulations and Interpretations Office of Exemption Determinations

Employee Benefits Security Administration Employee Benefits Security Administration

Attn: Conflict of Interest Rule, Room N-5655 Attn: D11712 and D-11713

U.S. Department of Labor U.S. Department of Labor

200 Constitution Avenue N.W. 200 Constitution Avenue, N.W.

Washington, D.C. 20210 Washington, D.C. 20210

RE: Proposed Conflict of Interest Rule and Related Proposals, RIN 1210-AB32 and 

ZRIN: 1210-ZA25

Ladies and Gentlemen:

TD Ameritrade, Inc. (“TD Ameritrade” or “the Firm”) appreciates the opportunity to 

comment on the Department of Labor’s (“Department”) proposed regulations under the 

Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that will redefine 

the term “fiduciary” under Section 3(21) of ERISA and Section 4975(e) of the Internal Revenue 

Code of 1986, as amended, and will establish a best interest contract exemption (such proposals

hereinafter referred to as the “Proposal”). The Firm hopes that our comments are helpful to the 

Department as it assesses the potential impact of the Proposal, particularly on retail retirement

investors, and considers revisions.

I. Introduction

TD Ameritrade is a wholly owned broker-dealer subsidiary of TD Ameritrade Holding 

Corporation (“AMTD”). AMTD has a 40-year history of providing financial services to retail 

investors. AMTD, through its broker-dealer and investment advisor subsidiaries, provides 

brokerage and advisory services to over 6.6 million funded client accounts that total more than 

$702 billion in assets. The Firm also provides custodial services for more than 5,000 

independent registered investment advisors (“RIAs”). During the quarter ended June 2015, TD 

Ameritrade’s clients placed an average of 434,000 trades each day.

TD Ameritrade provides its services predominantly through the Internet, a national 

branch network and custodial relationships with independent RIAs. The Firm believes its 

services appeal to a broad market of independent, value-conscious retail investors, traders, 

investment advisers and institutions. 

At its core, TD Ameritrade offers retail investors, including plan participants and IRA

owners, a wide range of brokerage services. Such services are comprised in large part of state of 

the art trading platforms and tools, real-time streaming quotes, third party research and education 
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for free or at low cost. TD Ameritrade structures its offerings to appeal to different types of

investors – from active traders to long term investors, and from self-directed investors to those 

investors seeking more guidance and advice. Moreover, TD Ameritrade provides clients with a 

diverse set of investment products offered by independent third-parties, foregoing the creation 

and selling of proprietary products. 

TD Ameritrade shares the Department’s desire to help the retail retirement investor invest 

prudently. The Firm believes it is critically important to continue our approach of empowering

individual retail investors through a wide array of investment choices, education, tools and 

support necessary to help them navigate and select the investments they believe are best for them

and their long term financial goals. 

For years, TD Ameritrade has supported adoption of the best interest standard when 

giving personalized investment advice about securities to retail investors as provided in Section 

913 of the Dodd-Frank Act. The best interest standard would be enhanced by plain English 

disclosures, including conflicts of interest. For clarity for retail investors, and consistency 

among all brokerage services, there should be coordination of the standard for all investment 

products and services.

TD Ameritrade believes that, despite the best intentions of the Department, the Proposal 

would adversely impact the great strides the industry has made in many areas and our ability to 

satisfy the needs of retail investors. The Firm believes the Proposal may suffer from an 

incomplete understanding of today’s retail investor and the evolution of the financial services 

industry in serving their needs. TD Ameritrade hopes that our comments will help enhance the 

Department’s understanding in these areas.

Below, our comments will focus on our view that the Proposal, as currently drafted, 

could be harmful to and not in the best interest of all retail investors saving for retirement or 

trying to generate income in retirement.

II. Negative Impact on the Retail Investor

TD Ameritrade agrees with the Department’s premise that the use of IRAs has evolved 

since the passage of ERISA. New financial services models have also evolved dramatically over 

the last 40 years. A plethora of free investment data, tools, research, education and support is 

now generally available to retail investors with the intent of making investors better informed, 

the extent of which would have been unimaginable to plan fiduciaries in the 1970s. 

Yet, the Department’s proposed broad definition of “fiduciary” would operate to diminish 

the ability of brokerage firms like TD Ameritrade to provide these free or low cost services to 

retail retirement investors. In fact, absent a best interest contract, a firm would only be able to 

deal with IRAs: (1) on an order-taker basis; or (2) pursuant to an advisory account with an assetbased fee. Under the first alternative, retail investors would experience the bare bones, selfdirected brokerage account of the 1990s – having to complete transactions with little to no 

trading tools, no stock screeners and research, and little education. The second alternative would
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result in transitioning many IRAs from a transaction-based payment structure to an asset feebased model. Both alternatives appear to be inconsistent with the result the Department is trying 

to achieve – serving the best interest of the retail retirement investor.

Retail investors need, and have become accustomed to, ready access to information, 

education and alternative solutions. The Department’s proposed definition of fiduciary is so 

overly broad that even call center representatives would not be able to answer the simplest of 

questions about IRA rollovers without falling within the definition of fiduciary and triggering all 

of the best interest contract exemption (“BICE”) implications. (In its current form, the BICE has 

severe implications, as discussed below.) TD Ameritrade believes the effect of the Proposal

would be to severely limit information, education and choices that the retail retirement investor 

currently has a right to access on an affordable basis.

Our retail clients come to us online, by phone and in visits to our branches to discuss our 

products and services, the many investment options available to them, and financial investment 

education. The Department’s Proposal would almost certainly result in extremely limited or 

non-existent support conversations (even those initiated at the request of self-directed retirement 

investors) at critical times of need. Such support currently is offered at very little or no cost.

Absent that support, the Firm believes retail retirement clients would be required to either incur 

additional expense to meet their needs or choose to remain uncertain as to the risks of their 

decisions. 

There also appears little doubt that, without any support, tools or education as to the 

benefits of keeping their assets in the retirement system (either in a plan or in a new IRA 

rollover), retail investors’ leakage of assets from the retirement system would accelerate. This

likely will result even though the best intentions of the Department are to enhance and improve 

the regulatory protections available to retail retirement investors and to encourage retirement 

savings. We note that an Oliver Wyman report was recently submitted to the Department titled 

“The Role of Financial Advisors in the U.S. Retirement Market.” We share the concerns 

identified in that study of the Proposal’s unintended consequences, such as potential limitations 

on the retail retirement investor’s receipt of guidance, dearth of economically rational fee 

structures for smaller referral accounts, and potential retirement fund leakage.

III. Harmful Restriction of Investment Choices

The proposed BICE is a complex regulatory design that fails to achieve its essential 

purpose, which is to allow for continued availability of valuable and essential financial services 

to retail retirement investors. For example, for what appears to be the first time in its history, the 

Department is proposing a limited list of permitted assets. 

TD Ameritrade retail clients currently have a wide choice of investments for their IRAs, 

many of which are not included in the BICE list. And those not included may be used for 

important risk mitigation and investment diversification purposes. One glaring exclusion is 

options. Retail investors understand that a tax advantaged account is the ideal place to generate

income from a portfolio. In fact, the Firm strongly believes, that options, when coupled with 
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sound education and investor qualification processes can be used for important risk mitigation 

strategies.

1

 Without the ability to trade options our clients would lose the ability to protect a 

portfolio or a specific investment by using a commonly purchased put option for downside 

protection. Similarly, using a very common covered call, an IRA owner can have the benefit of 

maintaining a long held position in a stock and adding some downside protection, while 

generating income. In addition, investors can use cash-secured put strategies to generate income, 

or acquire stocks at a discount. Recognizing that clients must qualify to trade options and 

education support is made available, the Firm believes the Department should include options on 

the BICE list of permissible assets. We also believe that so-called “alternative investments,”

over the counter equities, and futures, none of which are on the BICE list, may be useful 

investment vehicles for diversification and volatility protection. 

Also of import, the plan platform carve-out and other related aspects of the Proposal fail 

to include all retirement plan menu options that are currently permitted, including plan 

participant self-directed brokerage accounts (“SDBAs”). TD Ameritrade’s experience has been 

that SDBAs can greatly benefit plan participants and generally are subject to certain investment 

restrictions, depending on the plan fiduciary. At a minimum, we believe SDBAs should be 

included in the platform, seller’s and BICE carve-outs and exemptions. 

Retail clients are smart. We see that all the time. Our Investor Movement Index or IMX, 

for instance, is a proprietary, behavior-based index we created to aggregate Main Street investor 

positions and activity to measure the activities of our retail investors and how they are positioned 

in the markets. Our experience is that they understand the market and certainly understand their 

own needs better than anyone. The Department should respect the intelligence of the retail 

investor as we do, and allow brokerage firms to continue to provide investment choices, 

education, tools, and assistance, and when making a specific recommendation, do so under a best 

interest standard. This is attainable and the industry is supportive.

IV. Unnecessary Restriction of Access to Information

TD Ameritrade believes the Department’s Proposal to turn a retail retirement investor

initiated conversation about potential rollover options into a fiduciary act would, in practice, 

deny such retail investor access to support during this critical financial event. Broker-dealer IRA 

rollover activities are already subject to FINRA regulations requiring any recommendations to 

sell, purchase or hold securities to be suitable for the customer and the information that investors 

receive must be fair, balanced and not misleading. The retail retirement investor’s need for 

support in the rollover area should be viewed as paramount and not be discouraged by a need for 

a signed best interest contract before that conversation can even be initiated. TD Ameritrade 

would recommend that the definition of fiduciary be narrowed so as not to capture circumstances 

where both parties understand that specific recommendations are not being made. 

1 TD Ameritrade also requests clarification that a brokerage firm’s screening and approval of an IRA to trade 

options, absent other fiduciary conduct, would not constitute a recommendation as to the management of 

plan assets. The Firm believes it would be inappropriate to equate a broker’s assessment of the investment 

knowledge and experience of an IRA owner to engage in options trading to the role of fiduciary 

recommending or making investment decisions for the IRA. 

 
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TD Ameritrade also sees a need for greater flexibility in regard to IRA rollover 

conversations for RIAs. For example, we understand some RIAs which manage retirement plans 

are concerned as to how to address a plan participant seeking their advice as to a rollover in the 

context of the Proposal. Even if the RIA is a discretionary investment manager which would not 

be eligible for the BICE in the conduct of its business, the RIA would run afoul under the 

Proposal by advising the plan participant about a rollover without a signed best interest contract 

(the need for which would end if the participant did a rollover managed by the RIA). It should 

be possible for the Department to establish conditions under which such activity could be 

conducted without a best interest contract. For example, the RIA could be exempted from 

having such a contract if there were a disclosure document signed by the participant 

acknowledging that the four basic options (leave the money in the plan, move the money to a 

plan with a new employer, roll the money into an IRA and take a taxable distribution) had been 

discussed.

TD Ameritrade agrees with many other commenters that the voluminous contract and 

disclosure requirements of the proposed BICE would be extremely onerous to implement, 

unnecessarily costly without serving clear investor needs, and likely to cause extensive 

interruptions in client service. There is a place for rational, understandable and relevant 

disclosures and we should be able to find common ground on what these disclosures should 

include and when they should be provided. Certainly, there are good reasons the Department 

could rely, at least partially, upon the existing ERISA Section 408(b)(2) disclosures that the 

industry spent much time and effort implementing in 2012. 

Ultimately, the Firm believes the BICE in its current form would be viewed by retail 

retirement clients as a disservice and disruption to their needs for simplicity, speed and 

choice. Again, the Department’s desired end is laudable, but its proposed means restrict 

important beneficial information flow, causing unnecessary harm to the retail retirement 

investor. 

V. Hindrance To Helpful Services

TD Ameritrade believes that the Proposal should include a carve-out for the selling of 

services to retail retirement investors. Specifically, any market participant (broker, custodian, 

fiduciary, advisor, trustee, etc.) seeking to be hired or promote the use of its services (or affiliate 

services) should not be considered a fiduciary. Under the Proposal, the sale of services, such as 

the investment advisory services of our affiliate Amerivest Investment Management, LLC 

(“Amerivest”) or a referral to an independent RIA through our AdvisorDirect service (both the 

Amerivest and AdvisorDirect services are provided under the Investment Advisers Act of 1940), 

or even of an IRA rollover, are not covered in any of the Department’s exemptions or carve-outs.

At a minimum, the Firm believes the selling of services to retail investors (both selling of a 

firm’s own services, or affiliates or counterparties) should be included in both the seller’s 

exception (based on the 2010 Department proposal) and the BICE. 
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Additionally, TD Ameritrade believes the proposed new education restrictions on 

providing specific examples of investments would dramatically limit retail retirement investors’

access to valuable and informative online tools. These include investment screeners and strategy 

engines that allow for the investor’s self-selection of specific investment criteria that result in 

specific lists of investment assets meeting the criteria. The Firm believes the use of specific 

examples is essential in cementing an investor’s understanding in the educational process. In 

fact, TD Ameritrade believes that the proposed education carve-out would so limit the 

information that could be shared as to be virtually useless to an IRA owner who is not already 

well-versed in the basics of financial services, the range of investments available and investment 

strategies. 

VI. Retail Investor Confusion

Currently, the same services and information can be provided to an individual for both 

their regular account and their IRA. As a practical matter, if the Proposal becomes effective in 

anything like its current form, there will need to be clear distinctions made between servicing the 

individual’s regular account versus their IRA. It likely will confuse clients as to the rationale for 

this seemingly artificial distinction. For example, even if the BICE were in place, a retail client 

who had been using options in both their taxable account and IRA will no longer be able to do so 

in the latter as options are not included in the BICE definition of assets. Especially given the 

benefits afforded by the use of options, the distinction will not seem rational or fair to the retail 

investor.

Clients utilize the products, services, education and tools of their financial advisors for 

many varied reasons and they are accustomed to having all of them available from one provider. 

Moreover, it is customary for online brokerage firms to have this level of selection available for 

their clients. By eliminating the unnecessary distinction in what can be offered in a client’s IRA

from a client’s other retail accounts while requiring a best interest standard apply to the 

recommendations, retail investors can retain the selection of products and services they expect 

and deserve in all of their accounts. 

VII. Conclusion

TD Ameritrade prides itself on understanding and advocating for its clients. The Firm 

also prides itself on providing a wide range of helpful support services, education, tools and 

products to both retail investors and RIAs at little to no cost. The Firm is concerned that the 

Proposal as written would constrain the retail retirement investor’s access to a number of these 

products and services on which they currently rely.

The Firm believes the Department’s Proposal could be re-written in a way that respects 

the abilities of the retail retirement investor and understands their needs, and also respects the 

ability of the financial services industry to operate in ways that comply with existing regulations

and are consistent with the best interest of their retail clients. TD Ameritrade hopes these 

comments will assist the Department in revising its Proposal so as to continue to allow retail 

retirement investor access to low cost brokerage services, trading tools, education and research. 
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The Firm believes a clearly defined best interest standard, appropriate conflict of interest 

disclosures, a considerably revised BICE and an enhanced sellers’ exception would be 

constructive steps. The objective should be to establish a workable framework that would be 

simple and understandable to retail retirement investors, while, at the same time, achieving the 

Department’s stated goals. 

TD Ameritrade appreciates the opportunity to comment. Please feel free to contact me at

443-539-2125 with any questions regarding our comments.

Respectfully Submitted, 

Ellen L.S. Koplow

EVP and General Counsel

TD Ameritrade Holding Corporation