TD Ameritrade FY 1Q15 Earnings Call Notes

Fred Tomczyk

We’re still seeing a wait and see attitude from the broader client base

“January month-to-date, trades are averaging 579,000 trades per day. While trading is up and the number of clients trading are as up as well, we are still seeing a wait-and-see attitude from the broader client base. Those who are trading are doing so quite actively, but the average investor is waiting to see which way this market will turn next.”

Coming into what is typically our busiest time of the year

“We are coming into what is typically our busiest time of the year and our strongest trading quarter. With so much uncertainty, we would expect economic and geopolitical news to continue to driving investor sentiment throughout the near term.”

INterest rate increase is good for earnings

“We are also quite pleased that for the first time in nearly a decade, the Fed has raised interest rates. We have operated quite well through a prolonged difficult economic environment. And while challenges and uncertainties remain, this action is a positive from an earnings perspective. ”

The presidential election will undoubtedly have its own influence

“We can’t predict what specifically the year will bring, but we would expect geopolitical and global economic uncertainty to continue and the upcoming presidential election will undoubtedly have its own influence on investor sentiment and the markets. ”

Advisors are not growing as fast as they were

“the retail asset gathering is slightly up year-over-year and the institutional side is down. The institutional side is down largely to existing advisors. They are continuing to grow, but they are not growing as fast as they did last year at the same time. ”

It’s hard to gather assets in a flat market

“With respect to sort of pipelines, the pipelines are still very full and very robust with respect to breakaway brokers and sales opportunities. We have got a National Conference coming up, which is usually a big event for us where we do gather a lot of assets in the quarter following that conference, but the sales cycle just takes a bit of time here. But it’s not surprising to me I think the market was flat last year. So, it’s just a more challenging market for people to gather assets, but we continue to do quite well in that market.”

Breakaway broker movement is a secular trend we don’t see changing

“the trend to independence has been a long and very significant secular trend we don’t see changing. And so I think that’s an upside to the breakaway broker movement from our perspective. Having said that, in down markets like this, it’s usually a time where people just hold up, talk to their clients and are less apt to make that shift.’

It’s tough to differentiate in a flat market if you’re an advisor

“In our discussions with them, it’s much more the market environment. It really is basically the market was essentially flat last year, so we target to differentiate yourself. And so it’s just a different market. The environment as I said earlier most investors are a little bit tentative right now and taking a wait-and-see attitude. So, while they maybe talking to a lot of people, taking actions just slowed down a bit here.”

We would expect volatility to continue

“so far in January, we have a very different market that has a negative tone to it. It’s been good for trading volume. But I think as we move through the quarter and the balance of the year, from our point of view, we will continue to see volatility and it will all depend on geopolitical events. The price of oil seems to be a big factor right now, the growth rate in China and certainly, actions of the Fed and the Presidential election are all going to have influences on the market from here. It’s a very difficult market to call. But as we said at the beginning of the call, we would expect its volatility to continue here.”

Steve Boyle

Margin balances have held pretty well in January, cash is up

“Margin balances have held in pretty well in January, but we would expect in this kind of environment that we would see some declines in margin balances. Stock lending is always difficult to predict. Cash levels, free credits are up significantly, so cash is up.”