How TD Ameritrade Is Planning for Tomorrow
March 2, 2009
Many financial firms are struggling with today's economic challenges. But TD Ameritrade isn't just looking to get through these difficult days. According to COO Dave Kelley, the online brokerage is laying the groundwork--much of it with information technology--to prosper when conditions improve.
Kelley, who is in charge of TD Ameritrade's operations, technology and strategic project management initiatives, is uniquely qualified to help lead the charge. Before his September promotion, Kelley was the firm's chief information officer. Prior to joining the brokerage in 2006, Kelley spent 19 years at Merrill Lynch & Co. in a number of senior management positions, including controller for the national sales division and director of finance, administration, technology and operations for the investment strategy and product group.
One of Omaha-based TD Ameritrade's most immediate tasks is integrating its operations with those of thinkorswim, an online brokerage it agreed to acquire in January in a deal valued at $606 million. TD Ameritrade has some experience in the area, given that the company itself is the result of a number of mergers, including the deal three years ago that brought together e-brokers Ameritrade and TD Waterhouse to create one of the top U.S. securities firms.
Kelley recently spoke with Securities Industry News about the challenges of integrations, TD Ameritrade's Web 2.0 and mobile computing moves, and how the firm is positioning itself for better days ahead.
TD Ameritrade continues to expand-the acquisition of thinkorswim being a good example. What are the major integration challenges your firm has faced and what lessons have you learned?
No matter how good you are, there's always going to be surprises. So I think we've been successful because we've been flexible enough to adapt to those surprises.
We've also been good at doing a couple of other things. A lot of firms, when they integrate, don't complete the integration. They leave assets in place. They don't completely consolidate applications, infrastructure, and even some client functionality. And they get to a point where it becomes impossible to support the pieces. They don't get the operating leverage or the cost benefits of doing the acquisition that they thought they would. We haven't made those mistakes. We've completely consolidated all the acquisitions that we've had to date. And, with the one we have coming up, we'll do the same.
How have you been able to successfully integrate assets when it appears a lot of other companies struggle to do so?
I think it's discipline more than anything. We've gone through integrations a number of times, so I think we have a pretty well-formulated process that allows us to do that.
The other thing is that we have very, very clear directives in our business. We have three businesses--a trader business, a long-term investor business and an investment adviser business. And we are clear on what our objectives are. And because of that, when we integrate, we layer in the functions that we think will help us and leave out functions when we think we possess something that's better. We fold the functions we want into those three businesses as best we can and get a best-of-breed product when we're done.
One other thing that helps us is that we have our own proprietary books and records. A lot of companies don't have that--they have their books with another provider. It just adds complexity to what you're doing.
