Brooke’s Note: Fidelity Investments has Edward “Ned” Johnson III as its leader. The Charles Schwab Corp. of course has “Chuck” Schwab, its founder. Now it looks as though TD Ameritrade has Ed Clark. These leaders are famous for being highly conservative — right up until they see a big opportunity. Then they authorize big investments in growth and don’t look back. They also have a knack for avoiding the penny-wise, pound-foolish decisions that kill other companies. This was the first time that Ed Clark has spoken at a TD Ameritrade conference for RIAs. This may not be a coincidence. The Jersey City,N.J.-based custodian is acting anything but nonchalant in its pursuit of Fidelity Investments and Schwab Advisor Services. TD seems to have a sense of conviction. What better place to get it than from a CEO who just navigated TD Bank through an historic banking crisis without hitting any icebergs. That bank owns 45% of TD Ameritrade Holding Inc. of Omaha, Neb. This article gives a peek at this important leader and gives the sense that he’s a man that we may hear from much more in the future.
TD Bank has no plans to offer financial planning and investment management through its branches in the U.S. market, said Ed Clark, chief executive of TD Bank Financial Group to an audience of hundreds of RIAs gathered at TD Ameritrade’s annual conference.
At the end of a keynote address on Thursday at the Rosen Shingle Creek Resort, an RIA in the audience rose to ask Clark whether TD has any plans to expand its model of offering financial planning under the TD Bank umbrella, as it does in Canada, to the U.S. market.
“No. Absolutely not,” Clark said, to applause from the audience.
Pedal to the metal
He also revealed that he’s been pushing TD Ameritrade CEO Fred Tomczyk to take on Schwab and Fidelity.
“”I’ve told Fred, ‘Pedal to the metal.’
“Why don’t you just go ahead and blow Schwab and Fidelity out of the water and take market share?”
TD Bank Financial Group is a 45% stakeholder in TD Ameritrade.
As part of his answer to the question of whether TD Bank would offer more investment services that might compete with RIAs, he said that advisors don’t need to worry about these other forms of competition, like online brokerage services.
“Good advisors just blow away these other channels,” he said, adding that the big money always lands with good advisors.
Much of the rest of the speech focused on the economy and the political situation in the United States. In low-key tones faintly tinged with a Canadian accent, Clark issued a damning indictment of the U.S. political system and, though he did not name names, at President Barack Obama’s leadership during the financial crisis.
“Yes, the United States has the greatest entrepreneurial society and the most human capital (of any country) in the world,” he said. “It also has the most dysfunctional political system in the world.”
He gave advice to Obama: stop with the flow of new ideas, and focus the world around one or two key reforms.
“What the world needs now is calmness,” he said.
He suggested that the two priorities for financial reform ought to be 1) Getting the capital rules for the dealer right and 2) Getting agreement that everyone will adhere to those rules.
“He’s not going to listen,” Clark said.
Clark’s personal stock has risen in the past two years. He’s been CEO at TD since 2002. In 2005, he closed the bank’s structured-products division, even though it was profitable. He’s said in the past that he didn’t want a casino sitting on top of his bank.
That decision looks mighty wise in the context of the last two years. TD, like other Canadian banking companies, has remained healthy through the crisis.
The health of the parent company is giving TD Ameritrade sheen right now, which several RIAs referred to in their questions.
About the economic scene, Clark also made these points:
• He believes that the economy has reached bottom, and the question now is the heat of recovery, which looks to be tepid.
• A lost decade, similar to Japan’s, is the nightmare scenario for the United States. He said to avoid that, he’d keep monetary policy looser and tighten fiscal policy.
• Eventually, he believes what will spur political change in the United States will be fear of China’s rising power. “When the Chinese own all the money, they’re going to have all the power,” he said. “America is going to realize that and stop spending on the credit card.”
• He believes interest rates could stay low through early 2011, especially because of the extent of the global problems. But “I’m not good at managing money,” he said. “I’m good at managing companies.”
_Elizabeth’ note: The RIA who asked the question about potential competition for RIAs from TD wasn’t identified in the webcast. Care to step forward? We’ve love to give credit where credit is due for this critical question for RIAs.