TD Ameritrade Posts Record 2019 Results, Upbeat About Commission-Free

Retail broker TD Ameritrade released its financial results for the 2019 fiscal year on Tuesday.

The Nebraskan firm had a very successful year, seeing record net revenue of $6 billion - a ten percent increase on 2018.

In its report, the broker also revealed that new clients brought in a record number of assets. Those totaled $93 billion.

The additional funds also took the total number of assets held with TD Ameritrade up to $1.3 trillion.

“Fiscal 2019 was another good year for TD Ameritrade, as we enhanced the investing experience for our clients and delivered strong results across all core metrics," said Tim Hockey, president and chief executive officer, TD Ameritrade.

“It was a year of significant accomplishment and change as we took full advantage of our scale to deliver on our financial targets, diversify revenue, and further increase our operational efficiency.”

Short-term decline, long-term growth

More interesting than revenue and client funds were TD Ameritrade's comments on its new commission-free offering.

The broker's report indicates that between 15 to 16 percent of its 2019 revenue was derived from trading commissions. In real money terms, that equated to approximately $230 million per quarter.

One would assume that the prospect of losing such a substantial source of income would damper the mood of a company CEO, but Hockey was, at least in writing, upbeat.

"With price no longer in the mix, we will compete on the value of our offering with an exceptional client experience via our award-winning platforms and investor education, cutting-edge technology, and a full range of offerings,” said the TD Ameritrade CEO continued.

“We are working diligently to take advantage of new revenue opportunities and control expenses to replace the lost economics.”

Despite Hockey's positive words, the move to commission-free trading is likely to dent TD Ameritrade's near-term revenues. The broker said that it expected a decline in revenue during the first quarter of 2020 but that, due to organic growth, things would pick up again afterward.

"TD Ameritrade is methodically working on new plans for profitable growth and will take measured strategic actions as needed," said chief financial officer Steve Boyle.

"We will continue to invest in our business and expect results to provide significant shareholder value.”