Tom Bradley’s Sad, but Unsurprising, Exit From TD Ameritrade

Industry observers lamented the departure of Tom Bradley, the former head of both RIA and retail operations at TD Ameritrade.

Bradley’s time at the brokerage firm ended Thursday, when TD Ameritrade said that, as part of its merger with Scottrade, it was putting Pete deSilva in charge of the combined firm’s retail distribution business.

“Talk about a leader. Bradley was one of the good guys. He put his heart and soul into the RIA business” over the past 30 years, said consultant Tim Welsh of Nexus Strategy in an interview. “He championed the RIA cause when no one else was,” Welsh said, “since day one. TD’s RIAs will miss that.”

Recruiter Jon Henschen says Bradley helped establish TD Ameritrade as a key player in the hybrid model for independent broker-dealers.

“He has also stayed clear of potential conflicts of interest, such as in-house financial planners or brick-and-mortar offices that have the potential to be competition to their independent advisors,” Henschen explained in an interview.

Others agree.

“Tom Bradley may have been the single largest, most consistent advocate for RIAs for more than a decade,” said Chip Roame, head of Tiburon Strategic Advisors, a consulting and research firm.

In the world of M&As, though, hiring and firing are part of the territory. “Peter deSilva is a seasoned executive who importantly will help bridge the acquisition of Scottrade,” said Roame.

This appears to be the thinking at TD Ameritrade, which announced a year ago that it was buying a rival discount brokerage firm for $4 billion.

“It was a very difficult business decision, but it was the right one, considering the implications of the integration ahead of us, as well as the plans we have for the long-term growth of this company,” said TD Ameritrade President and CEO Tim Hockey, in a statement.

Industry Dynamics

In many ways, Welsh says, Bradley’s departure could have been anticipated.

“It’ s not surprising at all,” said the consultant, who — like Roame — is based in the San Francisco Bay Area and once worked for Charles Schwab. “No one can ever survive a retail job at a discount brokerage firm.”

This has to do with the dynamics of the different business models, he explains. Custodial and clearing work is fairly profitable, but making money on discounted trading for retail investors is far from it.

When TD Ameritrade said it had struck a deal to buy Scottrade in October 2016, Welsh commended the move.

The strategic thinking that went into the merger, though, is looking less than ideal today, he explains, as Schwab, Fidelity and other players have moved to compete at lower and lower prices in the retail brokerage arena.

“The price wars have erupted, and now it looks like there are very few reasons to want to have all these retail accounts,” the consultant said.

Few Top Jobs

Bradley and other executives working in this slice of the financial services business “know they have a career path that is very narrow,” according to Welsh. “It’s an oligopoly” with just a handful of firms.

This means there “are few slots at the top,” he said.

Executives who have been passed over for key posts include Deborah McWhinney, who was head of Schwab Institutional from 2001 to 2007.

And when executives from the institutional or advisor side of the business move over to the retail side, “It’s a death knell,” Welsh said, given the difference in profitability between the two operations. “It’s just so difficult. No executive [switching out of the advisor side] has survived a retail appointment in the history of the discount brokerage business, as far as I know.”

As for what Bradley might do next, the consultant points to the activities of the recently retired former CEO of LPL Financial, Mark Casady: “Maybe he will take some time off, step into a role at a venture capital fund or hedge fund.”

With shifts in a company’s ownership, strategy and leadership, “people like Bradley get tossed around due to the vagaries of the business,” he added. “It’s tough, because the advisors just love him.”