TD Ameritrade (AMTD) announced Tuesday record earnings per share on record net revenue for its fiscal year ending Sept. 30, along with record net new client assets. In an interview, TD Ameritrade Institutional President Tom Nally said the company's advisor business was "firing on all cylinders" as measured by growth in assets custodied, along with a "significant uptick in trading," especially in options, and that its "sales pipeline is at an all-time high."
TD Ameritrade President and CEO Fred Tomczyk said during the company's earnings call with analysts that earnings per share for fiscal 2014 were up 16% to $1.42/share, on a 13% rise in net revenues to $3.1 billion. In the call and in a separate interview, he highlighted the 10% rise in net new client assets, to $53 billion, the sixth straight year the firm had double-digit growth in assets.
"When we started out our best year was $12 billion" in new assets, Tomczyk recalled, and as part of its earnings outlook for 2015, the firm expects 7% to 11% growth in net new assets. Over the past five years, TD Ameritrade has gathered $219 billion in net new client assets, or "one-third of our total client assets," according to Tomczyk. He also expressed pleasure at the record 24% growth, to $309 million, in investment product fee revenue.
Bill Gerber, chief financial officer, said on the call that "Interest rate-sensitive assets have grown to a record $100 billion, mitigating the impact of the macroeconomic environment and giving us the flexibility to invest in and grow the business."
In the fourth quarter, TD Ameritrade had net income of $211 million, up 6%, on net revenues of $795 million, with net new client assets up 8% to $13 billion, and average client trades per day of 403,000.
On the call, Tomczyk mentioned that wirehouses are getting better at retaining their brokers, while at the same time wirehouse brokers and larger IBD advisors are increasingly attracted to TD's offerings, especially in terms of its iRebal rebalancing software, its options trading offerings and its VEO open-architecture technology platform.
"People at wirehouses may leave due to the compensation grid or something the company wants them to push," Tomczyk said in the interview. "They may want level fees, or they want to annuitize or sell their practices — a whole variety of reasons. When they look at us, the support services and the great technology" TD Ameritrade offers, many conclude "this is the place I want to be. The Veo open access platform allows them to run their business the way they want to."
Nally agreed, saying that while "historically, wirehouses provided state-of-the-art technology platforms, there's been a big 180," and that TD's technology "trumps what the wirehouses have put out there."
As for wirehouses retaining their biggest producers, Nally said "one of the biggest things they've done is to write seven-figure checks" to their brokers, but wondered "how sustainable is that? That's a drag on the wirehouses and end clients wind up" paying for those bonuses.
