TD Waterhouse Group said it will focus on building its brand in existing markets and look to mine current customer relationships as its seeks ways to weather persistent market volatility.
The New York discount broker, which is mostly owned by Toronto-Dominion Bank, on Wednesday reported a loss of $21.8 million for its fiscal third quarter, which ended July 31. The loss reflects $22.4 million in after-tax charges for previously announced restructuring plans, the company said.
TD Waterhouse expects to slash its staff 30% by yearend, to 5,800 people, through layoffs and attrition, said chief financial officer Kevin Sterns. But executives said they would continue to spend on building a brand and on technology to serve existing customers.
We are preparing to relaunch our advertising campaign and will spend $125 million for the next year focusing on high opportunity markets primarily in the United States, said Steve McDonald, the chief executive. He said the company would also look for an increased share of existing customers wealth. This year, TD Waterhouse earmarked $165 million for advertising but slashed that budget to cut costs. So far this year, it has spent just $65 million on ads.
Meanwhile, TD Waterhouse is depending more on a customer segmentation strategy introduced last month to sell different services to investors and charge them accordingly. Frank Petrilli, the president and chief operating officer, said it is too soon to report results from that program, but ultimately the goal is to be a nimble service provider to existing customers.
One of the programs goals is get existing customers to consolidate other accounts they might have outside TD Waterhouse at the company. On a positive note, Mr. Petrilli said, TD Waterhouses adviser business grew 12%, to $16.7 billion in the third quarter.
Under the new segmentation plan, in which TD Waterhouse introduced a fee for inactive accounts, 50,000 accounts moved to inactive status during the quarter, partly offsetting the addition of 105,000 accounts. The company now has 4.6 million customer accounts.
Asked by an analyst whether TD Waterhouses parent would consider pulling the company back in-house as Credit Suisse First Boston Corp. just did with CSFBdirect, Mr. McDonald said the company wants the currency that being publicly traded affords it to do deals.
Weve said all along that we want to have currency to benefit from consolidation and not all the consolidation has occurred yet. Indeed, just last week the company announced plans to purchase R. J. Thompson Holdings Inc. of Omaha, a privately held direct-access broker, for an undisclosed sum. However, the issue of a buyback is not ours, its the banks, Mr. McDonald said.