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TD Ameritrade CEO's Top 6 Guiding Principles

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In his first presentation at TD Ameritrade’s National LINC conference as CEO, Tim Hockey laid out his guiding principles to grow the firm’s brokerage and custodial business which serves more than 4,000 fee-based RIAs.

Hockey became CEO immediately after Fred Tomczyk retired on Sept. 30, after having spent nine months as the firm’s president and before that more than 30 years in various positions at the Canadian-based TD (Toronto-Dominion) Bank, which now owns approximately 40% of TD Ameritrade.

After noting the “sheer disruption going on in the wealth management” industry, Hockey asked his audience whether they, as stewards of their firms, let their people know where they stand and how they communicate through words and action. Then he shared his Top 6 Leadership Principles, which have guided his career.

#6. Focus on your people.

“They don’t care how much you know until they know how much you care,” said Hockey. He recalled one of the best pieces of advice he ever got in business, which came from Tomczyk: Stop reading financial books. Read biographies, books about people who have lived great lives. “It’s all about the people.”

#5. Do those things that only you are uniquely capable of doing and delegate the rest. “Empower people in your firm,” said Hockey, noting that they are the people closest to clients. Doing so allows the firm to “move faster, be more innovative for all and more client centric.”

#4. Focus on your firm’s culture, not strategies that are “a dime a dozen.”

Culture “is the most important thing” that a CEO can create in an organization, said Hockey. “Culture eats strategy for lunch,” he said, quoting business management guru Peter Drucker. 

“Leaders should serve associates and associates should serve clients and [then] shareholders are rewarded … I will help craft that culture and be very purposeful about that.”

#3. Encourage speaking truth to power.

“Leaders rarely have the best ideas,” said Hockey, who recommended that leaders speak last and ask questions in order to encourage others to take the lead and create opportunities for them.

#2. Plan for the worst; expect the best.

This “paranoid optimism” also includes believing “your competitors are brilliant.”

#1. Measure and reward customer advocacy.

“Listen constantly to what your clients tell you,” said Hockey. “Keep asking how you can we improve the process, build on previous innovations.”

Hockey explained that in a world where products can be produced in weeks or months and trades are matched in a matter of seconds, the client experience can make the difference for a firm. That experience should be “positive and memorable” because it “means everything,” said Hockey.

To that end, he recommended that firms eliminate friction points, make business easier and more meaningful for the firm and its clients, which will require greater speed and scale.

He noted that TD Ameritrade’s acquisition of Scottrade will provide TD Ameritrade with “greater scale without the need for complex integration” and noted that the new, lower $6.95 trading commission that Schwab just announced is not a new price point for Scottrade, which has been charging just $7 a trade for the past decade.

As for the future, Hockey noted that TD Ameritrade and RIAs “need to offer a more diverse sense of services” to serve “clients at different wealth stages of their lives.”

As part of that approach, the firm and advisors need to serve those clients that are neither self-directed nor advisor-led but fall in between those two groups. “Our investors want more choice in how they engage with us,” said Hockey. More generally advisors “need to move up the continuum beyond asset allocation to become real life coaches for clients.”

As of year-end 2016 TD Ameritrade had $797 billion in total client assets in 7 million client accounts managed by over 5,700 independent RIA firms.

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