Reuters - Video

Edition: US | UK | IN | CN | JP

WealthManagement10

TD Picks up Brokers

Tuesday, November 02, 2010 - 05:12

CEO of TD Ameritrade Fred Tomczyk says the firm has picked up 280 breakaway brokers and he expects more reform in the wake of the Dodd-Frank financial regulations.

▲ Hide Transcript

View Transcript

Evans rating and a price war put a dent into TD Ameritrade results but the discount broker is sitting on more than a billion dollars in cash that could put to work to jumpstart the business. For the -- ex CEO of firm joins me today straight from the wealth management summit. So -- commission revenue is down on the back of weak equity trading you know it doesn't look like it's gonna pick up any time soon you talk a risk aversion. How are you see the trading more robust we'd like to see some movement in interest rates which were probably not clemency for awhile. Sort is a tough environment for us but we're gonna continue to invest in building does hurt our business model particularly. Having said that we -- reducing interest rates staying lower for longer. Probably another year maybe even a year and a half before interest rates start to move. We don't try to predict and our planning we just accept what it is there's nothing we can do All right thanks so much. Fred Townsend is the CEO of TD Ameritrade . I'm Dan burns and this is Reuters. Evans rating and a price war put a dent into TD Ameritrade results but the discount broker is sitting on more than a billion dollars in cash that could put to work to jumpstart the business. For the -- ex CEO of firm joins me today straight from the wealth management summit. So -- commission revenue is down on the back of weak equity trading you know it doesn't look like it's gonna pick up any time soon you talk a risk aversion. How are you managing in that environment. Well the reality is it has picked up I think the fourth quarter like the September quarter that we've had and we came in and they June July earnings call. We said it was looking like a more slow top typical slow summer season and was this was our trading -- around 318. 3181000. Trees -- since entries and picked up and true reporter on October. We're at about 367000. Tree -- that's up almost 50000 trees so. Equity markets have come back they're up about 10% since Labor Day so we have things changing things pick up. But even in that environment we'd like to see the trading more robust we'd like to see some movement in interest rates which were probably not clemency for awhile. Sort is a tough environment for us but we're gonna continue to invest in building earnings power. So are you launched a dividend you've done some stock buyback you refinance debt you've got about a billion dollars in cash. But you're saying that you don't see a lot of compelling. -- opportunities out there is a compelling in terms of the right business is not available or valuations are just too pricey right now it's primarily valuation -- we're seeing now where a lot of people have expectations that basically we just don't think our economic from mark. And what about else we've recently had a deal where -- bank did it take under -- Wilmington Trust and hear about not about by bank. But you think an event like that helps reset CEO is. Reality a little bit to realize that you know you're not gonna get what you want in in the financial space right. We hope but does I'm not sure does and our space I think that's that's a phenomenon unique to the banking world. It could happen is some companies in our space but I don't anticipate. You mention the low interest rate environment the Fed is about by all expectations to embark on a second round of quantitative easing. This low interest rate environment has got to be a killer for you how much longer do you expect -- to percent. It is very hard and she went back two or three years or in -- revenues were just over half that -- interest rate sensitive. They have been cut in half so it does hurt our business model particularly. Having said that we -- reducing interest rates staying lower for longer. Probably another year maybe even a year and a half before interest rates start to move. We don't try to predict and our planning we just accept what it is there's nothing we can do about it and we focus on what we can control. that the top of the program I mentioned a price war we're talking about ETS specifically you've introduced a hundred no commission ETFs. You know how how do you make that work economically. Well the way we looked -- it was you know it is something that's happening in the space. And that we need to be to respond to it we get our researcher McDonald that when investors were looking for was something more like the mutual fund supermarkets. Where you get choice not just one family you -- multiple choice they were looking for somebody like Morningstar associates that was gonna give them. You know some credibility in terms of that they were picked objectively. By an independent party. As we've married up all those contests and -- its creators screeners to help people find what they're looking for. Work with Morningstar created EPO market's. Regulation coming out of dot Franken and flash crash -- that are all the I'll talk ground there. You're expecting. As I take it to see. What -- hoping that we'll see limit up limit down imposed on individual stocks and equity indexes. When would you expect that -- take place. I think that's gonna take some time I think they're going through their study period now and they're getting -- I think that's what -- take longer than most people think to actually write the rules and put them in place. But we do think the SEC is on the right track they've done their -- report -- step on a quick. And they're doing all the right things and everything seems to be moving in the right direction so we're quite optimistic but it's gonna take time. Last question breakaway brokers to hear your. Some talk about -- Dodd-Frank and fiduciary standards. Oh could be something that could be a catalyst for more and you picked up quite a few -- Now we picked up 280 or so in breakaway brokers over the last twelve months. We do think that -- all is going on with Don Franken and the fiduciary standard version of broker -- standard. Depending on how that plays out and depending and -- gets interpreted and written in the details the devils always details we do think that could you know stark. Or promote another round of brokers breaking away and -- compares to what period a year ago. It's up but quite have been I don't know what it was -- reform but where are quite strong. All right thanks so much. Fred Townsend is the CEO of TD Ameritrade . I'm Dan burns and this is Reuters.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

TD Picks up Brokers

Tuesday, November 02, 2010 - 05:12