TD Ameritrade (AMTD) said it had net income of $205 million, or $0.38 per share, in the quarter ended March 31, up about 8% from $189 million, or $0.35 per share last year.
Profits met analysts' expectations, though revenue of $846 million for the period did not, despite a 5% jump from the year-ago period. Roughly 56% of total sales were asset based.
The firm says it had $14.1 billion in net new client assets, down from $16.3 billion a year ago and $17.5 billion in the earlier period. It also reported average client trades per day of some 509,000, representing an activity rate of 7.6%.
Total assets stand at $711.2 billion, up from $695.3 billion last year. Fee-based investment balances ended the quarter at $161 billion, up 3% year over year, while interest sensitive assets expanded to $112 billion, up 11% from last year.
"We continue to execute well, resulting in solid quarterly performances for each of our major revenue streams," said CEO Fred Tomczyk, in a statement. "Our focus for the rest of fiscal 2016 will be maintaining our momentum, our CEO transition [in September], aligning our business model with the Department of Labor fiduciary rule, and of course continued investments in our business."
During a call with investment analysts, Tomczyk explained that roughly $225 billion of TD Ameritrade's total assets are in IRAs. More than half of these IRA assets are held in independent RIA accounts. About 30% of net new assets come from IRA rollovers.
In terms of the firm's hybrid strategy, he says "the combination of the technology and with some human help," is what the firm sees as "the right model" for the broadest part of the investor marketplace; this approach "basically allows us to scale up and down the market whether you want to use the human being or you don't want to use human being."
The CEO also was clear on the significance of the Department of Labor's recently released new fiduciary standard and the impact it would have on the company's finances.
"We have some things we want to invest in; one of them is the Department of Labor. It is what we would say is the biggest change in the brokerage industry in many years, some would say since the deregulation of commissions, which is over 40 years [ago]," he explained.
In the latest quarter, TD Ameritrade's institutional channel had slower growth from existing RIAs "as a result of the market conditions," Tomczyk said during the call. "That said, our new RIA sales pipeline is quite strong."
