Full-service brokerage TD Waterhouse Private Investment Advice has seen its fair share of “Big Rs” in recent years: rebuilding, restructuring, revamping and rebranding. Now the firm’s president, Mike Reilly, is eager to bid farewell to its tumultuous past and introduce a few Rs of his own — namely, recruitment, retention and, with any luck, renewal.
“Our goal is to have the best full-service brokerage business on the Street,” Reilly says from his office on the 35th floor of the TD Tower in downtown Toronto.
It’s a lofty aspiration for a firm that over the past several years has been dogged by a string of executive departures and short-lived appointments. But Reilly is confident the firm is regaining its footing. By 2010, he wants to add approximately 250 new investment advisors to the current roster of 550, and take advantage of the parent bank’s “huge commitment” to its wealth-management operation, which includes TD Financial Planning, TD Water-house Discount Brokerage and Reilly’s full-service dealer, Private Investment Advice.
To hear Reilly tell it, leveraging off TD Bank Financial Group’s advice businesses is one of the biggest advantages of being a bank-owned dealer. Effectively, it allows advisors to share their clients with the businesses within the parent firm that can best meet their needs, thereby avoiding the “silo” effect, in which advisors hoard their clients for fear of losing them altogether. Instead of resisting the bank, Reilly says, integration is key.
“When people think of Water-house, they think ‘wealth management.’ They walk in the door and they have full-service brokerage, discount brokerage, financial planning, commercial banking, private trust, private counsel — they have all those things,” he says. “And if you look at the offerings on the Street, everyone is trying to be all things to all people. But no one is doing it in a fashion in which the businesses actually talk to each other. They perceive them as competition.”
So far, the integrated approach appears to be working. Over the last two years, Private Investment Advice has scooped up $2.5 billion in referred business from the retail bank, and its assets have grown to $41 billion from $28 billion.
But it’s not about super-sizing the advisory base, Reilly adds. Capping the growth at 700 or 800 advisors may be ideal for now, as advisors are aiming to manage fewer accounts with more assets. Smaller accounts are more naturally suited to TD’s financial planning arm.
“What we don’t want is to be all things to all people,” Reilly says. “Our advisors are much more comfortable with the focus of the organization as a whole. They understand the strategy, and they’re comfortable with the fact that their partners do add value.”
Granted, the transition didn’t happen overnight. The first sign of a turnaround came with the appointment of Bill Hatanaka, who joined the firm as executive vice president of TD Wealth Management Inc. in January 2003. At the time, the full-service brokerage was operating on a franchise model, with little alignment to the bank. Reilly was brought aboard in August 2004 with the task to rebuild and realign.
It didn’t take long for the dust to fly. By November, the firm’s impressive 70/30 payout grid was scrapped in favour of a more “traditional” compensation model that sees advisors earn an average payout of about 40%-45%.
Reilly overhauled the branch-management structure, and introduced a suite of new products and services, a new advisor desktop and a rookie training program.
All told, the firm lost between 40 and 50 advisors during the process, and the firm’s scores took a beating in Investment Executive’s annual Brokerage Report Card survey.
No doubt the compensation structure was the most lamented loss among advisors, but Reilly has held his ground. “It was an unprofitable model, and firms need to be profitable so they can reinvest in the business,” he says.
Advisors might not necessarily agree, he adds, but today they’re sitting in new offices with new portfolio-management software, better training and all the tools they need to manage their practices.
Reilly also made some changes to the branch-management structure in an effort to give managers more time to take care of their advisors. He capped production levels for producing branch managers and, in some cases, eliminated production altogether for managers at larger branches. The changes have affected approximately half the firm’s branch managers.
@page_break@In an industry notoriously unreceptive to change — even for the better — it wasn’t an easy time.
“I’ve done things that people don’t agree with,” Reilly admits. “But today we are running a very profitable, very engaged organization.”
Indeed, the firm’s scores in the Brokerage Report Card are steadily creeping up in most categories, although compensation scores have never recovered.
About 150 new advisors have joined the firm under Reilly’s leadership, and the attrition rate has levelled off at around 6%-7%. Now, he’s looking to fill some empty seats.
More than half of the firm’s branches have been built out to accommodate new advisors. But Reilly is cautious about who he lets through the door.
“We need to grow the firm, no question. But we don’t want to throw people up against a wall and see if they stick. We’re looking for people who want to move because they feel this is a cultural fit, that they’re prepared to go out and work with us as partners,” Reilly says. “If they’re just looking for a cheque, it’s not going to work.”
Ideally, the firm wants to bring on 65 rookie advisors a year, in addition to the regular recruits coming in from bank-owned firms and the independents.
Dave Pickett, the firm’s senior vice president of practice management, says bringing in rookies is a good way to start with a clean slate. “The culture over the past two years has changed dramatically, and brand new people are a good way to build on that culture,” he says. “It’s a very exciting time.”
Pickett was brought in by Hatanaka in 2003 and heads the developing investment advisors program, a 90-day training course aimed at helping advisors build their books, manage the client experience and manage assets. Almost all the 120 advisors that have gone through the program have completed it successfully.
Reilly is also hoping to attract more women to the brokerage field — not just for reasons of diversity, but because it makes good business sense.
“If I walk into a branch and there’s five men, well, I might be locking myself out of a segment of the market that may want to deal with a woman,” he says.
In the meantime, Reilly is spending a lot of his time on the road meeting with advisors, or looking for new ones.
“You can’t run a brokerage firm just sitting here,” he says, nodding to his surrounding office. “The only way you find out what’s going on out there is by going out and talking to people.
“And the worst thing you can ever hear is: ‘No one is listening’.” IE
Reilly aims for a few “Rs” of his own
TD brokerage hopes to add 250 advisors by 2010
- By: Lara Hertel
- November 1, 2006 November 1, 2006
- 11:18