Long known for a strong corporate culture and cutting-edge technology — and a longtime mainstay in IBD's annual best brokers list — TD Ameritrade (AMTD) is showing no signs of slowing down, even with a market capitalization of $24 billion.
When the company came out with fiscal first-quarter results earlier this month, it announced $19 billion in net new client assets, as well as record client assets of $797 billion, up 15%. Client trades per day jumped 11% to 487,000.
Newly tapped Chief Executive Tim Hockey cited the "Twitter effect" for the newfound momentum in trading.
"A lot of portfolios were repositioned as a result of Trump's win," he said. "It also drove more investors who are normally less active in the market to come back into the market."
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Pre-election, client trades per day were at 451,000. Postelection, they jumped to 514,000 and were holding steady in early January at 508,000.
Hockey wouldn't mind at all if Trump continues to tweet.
"His tweets drive market activity, whether it's related to individual companies, industry sectors or the U.S. dollar," he said.
Tools And Trading Platforms
TD Ameritrade earns high scores from customers, ranking among the top three brokers in Overall Customer Experience in the 2017 IBD Best Online Brokers study by Investor's Business Daily and polling partner TechnoMetrica Market Intelligence.
Rankings are based on a survey of thousands of investors, who rated how well their primary broker performs on 13 important characteristics. (See our methodology for more details on how the rankings were determined.)
TD Ameritrade scored in the top three in 11 of the 13 service areas. It received the highest rating in three categories: equity trading tools, mobile trading platforms and options trading platform.
Already the No. 1 online broker based on trading volume, TD Ameritrade recently announced plans to acquire Scottrade for $2.7 billion. The deal still faces regulatory scrutiny and isn't expected to be approved until the second half of the year. Once completed, the combined company's transactions are expected to increase to around 700,000 trades per day.
Hockey, a former Toronto-Dominion Bank executive with 32 years of experience in retail banking and wealth management, took over in October from Fred Tomczyk, who led the company from 2008-16. Hockey's promotion to the CEO post is ironic, because Tomczyk was a defenseman and a captain for the Cornell hockey team.
"I've known him for some 20 years," Hockey said.
Focus On Client
Going forward, Hockey says TD Ameritrade's focus is on the client experience.
"Companies that try to be everything to everyone are not being explicit about their brand proposition," he said. He later added: "Apple is great on product, Ritz-Carlton is great at client experience and Wal-Mart is good at pricing. All three are great brands because they chose to compete more explicitly on one dimension."
In December, Hockey announced plans to increase tech spending by 25%.
"Technology is integral to the client experience," Hockey said. "There's a lot of opportunity ahead with new innovative capabilities coming online."
In December, TD Ameritrade launched a service to bring financial market updates and stock quotes to clients using voice-enabled search through Alexa, Amazon's (AMZN) virtual assistant.
Derivatives (options and futures) remain a focal point for the company as they made up about 43% of daily average revenue trades in the first quarter.
In TD Ameritrade's Trade Architect platform, the Trade Finder tool simplifies the process of making an options trade. Just enter four simple criteria and the tool delivers trades that match your search. Using Ameritrade's Thinkorswim platform, option traders can access Stock Hacker to screen for stocks using fundamental, technical and option-related data. Trade Flash – a real-time streaming feature which shows large stock block trades - was enhanced to show large option trades as well.
Mobile trading continues to grow in popularity, and it's a strength at TD Ameritrade. In the first quarter, average daily mobile trades came in at a record 99,000, making up about 20% of total trades.
The company continues to invest heavily in mobile, with a recent focus on bringing mobile apps more in parity with trading platforms. Mobile Trader, for example, recently added several new features, including the ability to sort watch lists by any column while keeping device bandwidth low.
Mobile users also can customize symbol profile data to view data most relevant to them. Option traders can now view implied volatility and how much a stock is expected to move for each expiration date.
So-called "fintech" firms like TD Ameritrade have been shaking up the financial services arena for a while now, offering cheaper alternatives to traditional money management.
"We're getting back to our financial roots. We were the original disruptors in the wealth management industry, along with Charles Schwab (SCHW)," Hockey said.
It's also moving forward. Essential Portfolios, launched in 2016, is TD Ameritrade's first robo-advisor offering, an automated, digital advisory service. With it, investors get the benefits of professional management with simple portfolios at low cost.
Investors can set a goal, assess their risk-tolerance level and set long-term dates for key financial goals. There are five model portfolio strategies to choose from with fund recommendations by Morningstar Investment Management.
In addition, TD Ameritrade's Amerivest Managed Portfolios digital interface was recently overhauled to give clients a self-guided tool to define individual investing goals, select an investment solution and track progress with as much or as little human support as clients want. Fifteen diversified asset allocation models, constructed with mutual funds or exchange traded funds, are offered.
"We've been designing our products for our financial advisors and clients together. This way, we can find the sweet spot between the client experience on the digital side and in person," said Lule Demmissie, managing director of investment products and retirement.
In November, TD Ameritrade integrated earnings analysis tools into its Thinkorswim trading platform, including earnings estimates from Estimize, an open financial estimates platform that combines fundamental estimates for stocks from more than 3,000 independent buy-side and sell-side analysts, private investors and students.
Crowd-sourced estimates by Estimize have been shown to be more accurate than Wall Street 70% of the time.
On top of that, investors can go back as far as two years and get quarter-by-quarter comparisons for a complete view of a company's earnings history.
In terms of charting, a new feature is the Candlestick Pattern Editor. Users can create their own candlestick patterns in addition to an extensive list of predefined ones.
Perhaps the best-known candlestick pattern is the Doji, which has been shown to be useful in detecting trend reversals. For investors new to candlestick charts, the Thinkorswim learning center is filled with educational content.
The Social Sentiment feature (Social Signals) helps investors with trading decisions based on Twitter mentions.
Nicole Sherrod of TD Ameritrade is interested in what consumers are saying about hot products. (TD Ameritrade)
"We're not so much interested in picking company cash tags (as an example, IBM's cash tag is $IBM), but we are interested in what consumers are saying favorably or unfavorably about a company's product," said Nicole Sherrod, TD Ameritrade's managing director of trading.
Sherrod recalled a time about two years ago when Twitter sentiment was flagging trouble at Sears before the negative headlines started to hit. And using Deckers Outdoor as an example, Sherrod said: "Social Signals isn't really interested in $DECK mentions, as it is a tweet that says: 'Hey it's cold out. I'm buying a pair of Uggs,'" she said.
Thinkorswim also offers the Federal Reserve Economic Database (FRED), where investors can review historical economic data from more than 80 different domestic and international sources with access to to nearly 400,000 data points.