TD Ameritrade CEO Tim Hockey, E*Trade CEO shakeups weeks apart

E*Trade said on Wednesday that CEO Karl Roessner would step down immediately and be replaced by COO Michael Pizzi — making him the company's third CEO in six years.

TD Ameritrade said last month that Tim Hockey would be out as CEO early next year, but named no immediate successor.

Business Insider spoke with Hockey earlier this month, and he talked about the search for a new leader and guiding TD Ameritrade in the meantime.

Shakeups at two discount brokerage rivals in recent weeks have caught many industry-watchers by surprise — with E*Trade's chief executive stepping down and TD Ameritrade announcing its current CEO will be gone by early next year.

E*Trade said on Wednesday that Karl Roessner would immediately be replaced by COO Michael Pizzi — making him the company's third CEO in six years. TD Ameritrade said last month that Tim Hockey would be out as CEO early next year, but named no immediate successor.

The pair of departures come as emerging digital entrants in the retail stock-trading and wealth management space have ratcheted up competition, and some discount brokers have consolidated — TD Ameritrade acquired rival Scottrade in 2017. The industry is also under pressure from a flatter yield curve and lower appetite for trading from clients.

But unlike its competitor, E*Trade has avoided the “risk of a holding pattern” during a CEO search, Brennan Hawken, an analyst at UBS, wrote in a client note.

And Craig Siegenthaler, an analyst at Credit Suisse who rates E*Trade's stock positively, said Roessner's departure did not raise the probability that the company will be acquired or signal a change in strategy.

“We believe this was Karl's decision to leave, and was driven by personal factors (and not by the firm's decision not to sell last year when its share price was higher),” he wrote in a Thursday note.

Roessner's discussions with E*Trade about his desire to step down began late last week, and the final decision took shape early this week, a source familiar with the situation told Business Insider. Roessner said in a statement on Wednesday that E*Trade “could not be in a better place to achieve its next leg of growth” under the new leadership.

Similarly, TD Ameritrade's board said in a July 22 statement that the “best path forward” for the company's growth was Hockey's departure, without publicly elaborating on that decision.

Business Insider spoke with Hockey earlier this month, and he addressed how he's involved with the search process for a new leader and guiding TD Ameritrade in the meantime.

“It's still very early days,” Hockey told Business Insider, adding that the search committee has already interviewed his leadership team asking what they want in the next CEO and that the company had decided on an executive search firm.

He described the conversation leaving up to the announcement of his departure as ongoing, but said that the actual decision as coming together quickly.

Hockey has agreed to stay in his role until next February as the board of directors looks for a successor inside and outside of the brokerage. If TD Ameritrade names a replacement before then, he will move into an advisory role.

“It's an interesting leadership challenge, because what I'm trying to do is to keep the organization moving forward on the strategy and getting prepared for the environment ahead,” Hockey told Business Insider. Still, he said, “you don't want to make too many decisions for your successor.”

He added that he and his predecessor, Fred Tomczyk, still talk after Tomczyk left his post four years ago.

“It's helpful to have somebody to bounce ideas off,” Hockey said.

Even so, Hockey, who had been at TD Bank for 32 years before moving over to TD Ameritrade, said it is good not to have too much involvement at a firm once a successor is made clear.

“Having seen these happen before, too much of an overlap is not good for anybody,” he told Business Insider.

He said TD Ameritrade's approach gave it the “widest possible candidate pool,” and that having an incumbent for the next chief executive makes casting a wide net difficult.

E*Trade's more abrupt transition has also spurred speculation that Roessner could be headed to TD Ameritrade, according to one analyst, though the same analyst said they personally viewed any such link as unlikely.

“We do not believe he is leaving with another opportunity in hand or in discussion (we have even received several questions around a connection to Ameritrade's CEO search, which we think is unlikely),” JMP Securities analyst Devin Ryan told clients on Wednesday in a note.

And as for what's next for Hockey？

“At this stage, I will probably not take another CEO job,” he told Business Insider.