TD Ameritrade Holding Corp. has hired a former Wachovia Corp. executive to help the Omaha asset management company improve customer satisfaction and perhaps cross-selling, but analysts remain skeptical whether it can succeed.
TD Ameritrade announced last week that it had hired Peter Sidebottom to be the executive vice president of product. He is to join the company Feb. 17 and oversee product strategy and marketing. He has worked in the financial services industry for 20 years, most recently as the chief operating officer of Wachovia's finance division.
Fred Tomczyk, TD Ameritrade's president and chief executive officer, said Mr. Sidebottom helped refine the service organization at Wachovia, earning it client service awards for seven straight years. "His guidance will help us ensure that we're communicating with our clients and prospects in the most effective way possible, making use of the variety of communications channels available to us, so that our clients have the information they need to make confident, well-informed investment decisions," Mr. Tomczyk said.
Brian Hamburger, the founder of MarketCounsel, an Englewood, N.J., firm that serves registered investment advisers, said Mr. Sidebottom's Wachovia background may be a further indication that TD Ameritrade will continue to try to add banking services.
"While I am unsure if they recruited Sidebottom to cross-sell banking products to brokerage clients, everybody out there has tried to 'cross-sell' banking products within their ranks, and most have failed miserably," he said.
Bill Doyle, a vice president at Forrester Research, called the hiring a "smart move" because Mr. Sidebottom will help TD Ameritrade instill a culture focused on customer satisfaction.
He said Mr. Sidebottom undoubtedly brings the Wachovia "DNA" to his new post.
"His TD Ameritrade portfolio includes the overall client experience in addition to products and marketing," Mr. Doyle said. "That suggests that TD Ameritrade is serious about improving the customer experience. A part-time task force doesn't do it. An organization needs a senior executive who can develop a strategy and impose the discipline necessary to improve the customer experience."
At a time when investors are wary of large financial institutions, he said, it is important for companies to demonstrate that they have customers' best interests at heart. TD Ameritrade has not done a great job of that, he said, noting that it was in the bottom quintile of Forrester's customer advocacy rankings last year.
Mr. Tomczyk said TD Ameritrade will look to build momentum on its growing asset gathering strategy by building out a more robust cash management offering.
Jason Ren, an analyst at Morningstar, said that, as at other discount retail brokerages, TD Ameritrade's transactional revenues held up well late last year while the market's persistent volatility compelled people to trade.
Its planned purchase of thinkorswim Group Inc., a deal the company announced last month and expects to close by the end of June, should further improve transactional revenues, Mr. Ren said; thinkorswim's more actively trading customer base probably will not shy from trading as volatility persists.
"In my opinion, the same might not be true of TD's traditional mass-affluent base," he said. "If volatility becomes too much for them to stomach, [a] significantly decreased level of trading activity could occur. This is an issue because TD Ameritrade's customers have been surprisingly 'sticky.' They've stuck with TD Ameritrade despite the relatively low switching costs. Industry maturation implies slow account growth and pricing pressure."
Geoffrey Bobroff, an analyst at Bobroff Consulting Inc. in East Greenwich, R.I., said bringing in Mr. Sidebottom is interesting. "The tradition in the discount brokerage business is having top electronic tools and being less concerned about touch," he said. "This hire looks like TD Ameritrade is positioning itself to compete differently going forward."
Mr. Bobroff said Mr. Sidebottom will be in a position to help TD attract advisers, and the level of service that has a component of touch should help them.
David Schehr, a research director of banking and investment services at Gartner Industry Advisory Services, said he found the hiring a surprise because "he is being picked for a marketing role with no identified marketing experience."
Mr. Tomczyk said that, through prior management consulting work, Mr. Sidebottom has led successful initiatives in multiple industries to exploit geographic and product opportunities that led to double-digit growth for a variety of organizations.
Toronto-Dominion Bank owns a minority stake in TD Ameritrade.
