TD Ameritrade

An Interview with Mr. Joe Moglia, Chairman of the Board and former CEO of TD Ameritrade and Head Coach of the Omaha Nighthawks
By Mitch Cunningham MBA Candidate and Guillermo Salinas PharmD/MBA Candidate at Creighton University

We began our interview with Mr. Moglia by asking him to tell us about his background.

He was born in the Bronx in New York City. His father emigrated to America from Italy and his mother immigrated from Ireland. Both of his parents were very hard working people, his father owned a fruit store and his mother raised him and his four siblings.

He went to Fordham Preparatory and then to Fordham University where he played football and baseball. While he was at Fordham University he had to quit school and work with his father selling fruits and vegetables to help his family. However, he knew he had to return to school so he went back to Fordham University to finish his degree. This time he had no athletics, no money, and had to support his wife and child. During his freshman year he worked driving a cab, driving a postal truck and helping his father in the fruit store.

He thought something was missing in his life, and he decided it was sports. He went to Fordham Preparatory and began coaching there and during the offseason he helped his father. He finished his degree in Economics and thought he wanted to be an investment banker but loved coaching football. He figured he wanted to pursue a career in coaching.

At 22 years old, he became the youngest head coach in the state of Delaware. He coached for 16 years, turned two high school football programs around, set national records at Lafayette, won two Ivy League championships at Dartmouth, wrote 11 articles published in national coaching journals, and wrote a book on football. At this time he was offered a job to coach for the University of Miami, which would be far away from his family. He said “I couldn't do my job as a coach if I couldn't live up to my responsibility as a father”.

He quit coaching and he says it was painful. He always thought he would enjoy Wall Street so he started working at Merrill Lynch. They gave him the opportunity to be in their MBA training program, it consisted of 26 people total, some were from Harvard, Stanford, Creighton, and one football coach. Everyone thought the football coach wasn't going to make it. A few years later everyone was working for him.

He worked for Merrill Lynch for 17 years. His last job there was managing the investment products in the world, insurance, 401K, and middle market businesses.

Ameritrade was in some trouble at the time and they called to offer him a job. In the spring of 2001 he moved his family from New York City to Omaha, NE. In 2008 when financial armageddon happened and everyone was worried about the stability of the US banking system. The company, which was now called TD Ameritrade had its 6th consecutive record year for earnings in a row. He said it was time for him to move on, the board asked him to stay on as Chairman of the Board and he did.

He was offered several opportunities to go and run some of the biggest financial firms in the world, an opportunity to have his own TV show, and a call from Yale to see if he was interested in coaching their football team. He didn't lose any sleep over the media and business opportunities he was offered, but couldn't get the football out of his head. He decided he would return to football. For the last 3 years he continued to be Chairman at TD Ameritrade and was also the executive advisor for the University of Nebraska football team in 2009 and 2010.

When the United Football League planned to start a team in Virginia they offered him the head coaching position. However, the job as head coach for the Omaha Nighthawks became available and he chose to become the head coach and remains the head coach.

Define in your own words what ethics means to you?

“Ethics to me is basically two fold: first it is how you treat people and second is how you act. How you treat people, it has always worked for me. It works in small and large organizations, all you have to do is really believe it and implement it. The ethics is never a problem if you do the right thing, everything else just falls into place.

You don't need a lot of rules but you need the golden rule, treat other people the way you want to be treated. If you do this you should have no problem with diversity, sexual orientation, religion etc. Treat people with dignity and respect, things will work out in the long run.

The other side of it is doing the right thing. You can implement business morals, a culture, an environment whereby people know what is expected of them, but most importantly you have to have the strength to do what is right. The more rules you have the more people look for ways to get around the rules. When I have to make a decision whether it’s a football or TD Ameritrade decision you do what you believe is right. The ethics is never a problem if you do the right thing, everything else just falls into place.”

Describe an ethical situation in business that you have faced that was relatively easy to handle? Who was involved, where, what did you do, and why?

“When I was at Merrill Lynch I started to move up in executive management, one thing is that as much money as people were making they would still exaggerate, lie and cheat on their Travel and Expense reports.

When I was responsible for that my one message, which has been with me since I was a coach, at Merrill Lynch, everything I’ve done at TD Ameritrade and at the Omaha Nighthawks: being a leader is standing on your own two feet and accepting responsibility for yourself.

There was a situation where someone in an upper level position was doing this and I fired them. If we are paying you almost seven figures why would

you exaggerate on those expenses? It immediately set the tone with the other employees that if I did it with this guy, I wasn't kidding about you taking personal responsibility for your actions.”

Describe an ethical situation in business that you have faced that was difficult to handle.

“When Ameritrade bought TD Waterhouse from TD Bank in 2006 and we became TD Ameritrade we gave ourselves three years to integrate both companies and we announced that by the end of 2008 we would have everything completed.

One of the first things we did was to find out where to save money. We thought we were going to save money with employee benefits. The bottom line is that we originally decided to take what was the cheapest of what we were doing and what TD Waterhouse was doing and planned to save a few million dollars. Take responsibility, stand for what you believe in and what is going on in your organization.

Every quarter we met with our associates and asked them to talk about what was going on. After we had communicated the changes to the benefits plans people were feeling that we stabbed them in the back by lowering their benefits. I didn't realize that is how they felt. It is the job of a leader to know how their people are feeling.

At the next all-associate assembly which webcast in our locations throughout the country, I said I didn't know that was how they felt and I didn't realize we had gone that far. They were the reason why we were doing so great so we couldn't let them down. I told those associates that we would look at it again and come back to them with a solution. We set a task force and within 30 days we changed our entire employee benefits program.

Ethics is about doing what is right and treating people with respect and dignity. I knew I didn't have to stand behind management, shareholders, do the right thing for the employees. I had to go back to basics. Take responsibility, stand for what you believe in and what is going on in your organization.”

Talk about the ethical culture at TD Ameritrade.

“Everything I just talked about is present at TD Ameritrade. So for example it begins and ends with integrity. Our organization is not as good as it could be, but we believe we are doing the right thing and we never ever want to be near term greedy and make a decision that might be beneficial for our quarter and it wont strategically take us where we want to go long term or treat our people they way they ought to be treated.”

Is there a formal ethics program at TD Ameritrade?

“TD Ameritrade has a code of conduct that all associates are subject to and training also takes place. For me it was more simple, not a lot of training, Do you understand our mission, do you understand our priorities, do you understand to respect people? It is the way I run the Nighthawks, divisions in Merrill Lynch, raised my family, and how I ran TD Ameritrade.”

Have you had an ethics mentor? If so, who and why?

“The only ethics mentors I have ever had in my life are my parents. Both were immigrants and both were uneducated. My mom was always positive, glass was always half full. My dad was a little more negative, maybe glass was a little half empty.

He believed he was put on this earth to provide for his family, and he had an incredible work ethic. All I did was work and play sports as a kid. Then I coached and worked on Wall Street for 17 years. He never, ever saw me play once, not me or any of the teams I coached. To him that wasn't important, the importance was to provide and take care of your family.

“I learned to take responsibility for myself because of my parents.”

My mom was more balanced, she believed in having fun. Both were religious and both believed you had to do what was right. When they said you had to be home at 6 pm you had to be home by 6pm. I learned to take responsibility for myself because of my parents.

Do you see any connections between how you were raised and how you handle ethical situation at work?

Everything gets correlated to doing what is right. It is all connected. As I mentioned my parents were my mentors, so yes there are connections.

What are the biggest ethical challenges that you think face the younger business professional today? Any tips for dealing with them?

“The two issues I leave you with is that there is an incredible pressure to get to a good start, impress your boss, get good grades whatever it is. A lot of times what happens is you have to go back to having the strength to do what you think is right. Sometimes doing something you don't think is right but it looks good means you are being near term greedy. Eventually it will come around and hurt you. You want to take the perspective of what matters, how can you help and achieve those goals. Usually at the beginning people get near term greedy. The best advice I can give you is think about what the long term ramifications are in what you are doing opposed to the near term.

The second thing is the concept I call spiritual soundness. Spiritual soundness is knowing who you are, knowing your strength and weaknesses not who your parents or your teachers or whomever else thinks you are, it is who you really are. I am Guillermo, I am Mitch this is what I am about this is who I am. Be able to take that and find what skills are required to be successful in the roles. Ask yourself if you have the skill set, if you don't, get out of it, if you do have the skill set make sure it is something you like. The reason I say this is because if you put yourself in a position where you don't have the right skill set or you don't enjoy, you will not be productive. When you are in an environment where you feel good you can do what you think is the right thing. Near term greedy is bad, long term greedy is good. Know yourself well enough to get a position that makes you happy.

What do you think about the ethical culture at TD Ameritrade and how do you think you implemented it?

For me you begin with that as your foundation, TD Ameritrade’s priorities are clients, employees, and our shareholders. Clients because you don't have a business if you don't have clients. If you are near term greedy you could charge a little more this time but how do you really sustain long term growth.

“We want to have an inspirational mission for people to rally behind. Our goal is to bring financial literacy to this country.”

When I got here we had one million client accounts, and now there are eight million. This is only 10 years ago when I got to the company, there were 24 billion dollars in client assets, now there are over 400 billion dollars in client assets– long term greedy. Because you have a business you have to have a return for you clients, so you deliver value to both your clients and you shareholders and you do that through your employees.

Remember treat others the way you want to be treated. TD Ameritrade wants to have an inspirational mission for people to rally behind. One of its goals is to bring financial literacy to this country.