TD Ameritrade Holding Corp (AMTD) Q2 2019 Earnings Call Transcript

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TD Ameritrade Holding Corp (NASDAQ: AMTD)Q2 2019 Earnings CallApril 24, 2019, 8:30 a.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone and welcome to TD Ameritrade Holding Corporation's March Quarter Earnings Results Conference Call. This call is being recorded.

With us today from the company is President and Chief Executive Officer, Tim Hockey; and Chief Financial Officer, Steve Boyle. An audio file containing Mr. Hockey's and Mr. Boyle's comments on the quarter can be found on the company's corporate website amtd.com under Investor Relations.

This call is intended to address related questions from investors and analysts. Questions from reporters can be directed to the company's Media Relations team, or you can follow their Twitter handle @TDAmeritradePR, which will be live tweeting this morning's call. Let me take a moment to compile the questions.

Questions and Answers:

Operator

And we do have a question from Devin Ryan with JMP Securities. Please go ahead, your line is open.

Devin Ryan -- JMP Securities -- Analyst

Great. Good morning guys, how are you?

Tim Hockey -- President, Chief Executive Officer

Good. Thank you.

Steve Boyle -- Executive Vice President, Chief Financial Officer

Good.

Devin Ryan -- JMP Securities -- Analyst

I guess, first question on some of the moving parts in NNA in the quarter, just given a little bit lighter result, maybe if you could just go a little bit deeper on some of the key areas of delta from the prior quarter in both retail and institutional. I know you cited less investor engagement and a little less RIA movement, but it didn't seem like we saw maybe the same degree from some of the peers. So it makes sense that that would be a driver, but just curious if you can go a little bit more deeper and what gives you confidence that that could recover?

Tim Hockey -- President, Chief Executive Officer

Yeah, sure, I'll take a stab at that and we tried to actually give a little bit more color, probably a little deeper than we normally do in the prepared remarks, Devin. But look we -- if we look at the first quarter given our business model and mix, we saw a pretty significant outperformance, if you will, so we sort of combined the two and say, what does it feel like relative to the industry on a year-to-date performance. So 8% annualized year-to-date is the number that we look at. If we double click on to this past March quarter, then if you split it between retail and institutional, we did give you the color that institutional we saw the conversations with both perspective and our RIA clients about moving more money over was frankly pushed back a little bit as a result of conversations with their clients. And good news is, we've seen some of that trend diminish now certainly with markets now reaching new highs. And so, the pipeline seems to have picked up a little bit. On the retail side, similar trend, we saw very strong quarter for our more recent trend in the December quarter, and in March, was soft again because of the sort of deep V reaction from the markets, and now we're seeing a resurgence in the pipeline. So our sense is, this is not -- this is a one quarter anomaly, mostly driven by the effect of the market at the end of 2018 and we're feeling pretty good about the future.

Steve anything else from your point of view?

Steve Boyle -- Executive Vice President, Chief Financial Officer

No, I think that's great, Tim. Thanks.

Devin Ryan -- JMP Securities -- Analyst

All right. I appreciate, that's great color. And just to follow up on the Asia opportunity, I know you guys kind of touched on it briefly in the Q&A, but maybe talk a little bit more about what's new in Asia, you're scaling in Singapore and Hong Kong, but give any timetable on mainland China and whether it be potential partnerships with technology firms like WeChat like you have in other regions like in the US or partnerships with retail brokerages in the region, I'm just curious if there's anything else on the partnership side that may be booming here?

Tim Hockey -- President, Chief Executive Officer

Well, OK, so, clearly, Asia is a growth strategy for us and as we've alluded to many of the partnerships that we've established here in the United States. These aren't United States-based companies, so there are clearly relationships and discussions that are going on in Asia and in Mainland China as well. There's a lot of work going on, nothing that we're ready to announce just yet, but we're building up in preparation for a -- well, let's just call it an expanded growth curve once we get these capabilities and these partnerships cemented.

Devin Ryan -- JMP Securities -- Analyst

All right, terrific. Look forward to it. Thank you.

Tim Hockey -- President, Chief Executive Officer

Thank you.

Operator

Next question comes from Chris Harris with Wells Fargo. Your line is open.

Chris Harris -- Wells Fargo -- Analyst

Thanks. Hey, guys. So, wanted to ask you guys a question on the cash balances. A good bit of cash is now in purchase money market funds and that's coming at the expense of the BDA balances. Have you guys given any thought or considered ways to monetize the balances to a greater extent that are in money funds? I guess one of the options available to you is to create your own money market fund products, but I don't know if there are other options that are potentially under consideration?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, so, Chris, we did see that as you noted, it did come down pretty significantly in this quarter relative to the prior quarter, and we do get paid on most of those funds that are moving either to sweep or to purchase money funds, we receive remuneration for that. So, it's a positive for us. It's obviously not as much as we earn on if they were swept to deposits, but we're still keeping the money in-house. So we are earning on them.

Tim Hockey -- President, Chief Executive Officer

Yes, and in terms of Chris, the product development side, always looking at what options our clients would like to have available to them, and when it makes economic and strategic sense for us, we'll look to do, but we wouldn't be announcing it on the call.

Chris Harris -- Wells Fargo -- Analyst

Okay. Thanks for that guys. Just a related follow-up, would you consider offering a more competitive interest rate on less transactional cash balances to help support the BDA or is that not really under consideration at this point?

Tim Hockey -- President, Chief Executive Officer

The nature of our business is that we think of the vast majority of the cash on hand as, call it transactional, ready for the next opportunity to invest in and so, we found that the deposits themselves are generally quite sticky. When they're not, we have carried interest rates to accommodate clients looking for yield, and as a fall back, obviously we have other products that are available to them. So, again, it's all on this continuum of what are clients thinking about in terms of the uses of their cash and how interested are they in keeping it powder dry for a trade versus searching for yield, and as you know, that's an ongoing interesting discussion to have relative to the yield environment. With yields now seeming to, -- and interest rates now seeming to have topped out for a period of time, it's one of the reasons why we think the cash sorting is maybe topped out or abating now.

Chris Harris -- Wells Fargo -- Analyst

Okay, great, thanks guys.

Operator

Your next question comes from Richard Repetto with Sandler O'Neill. Your line is open.

Richard Repetto -- Sandler O'Neill -- Analyst

Yeah, good morning, Tim. Good morning, Steve. (Technical Difficulty) Good morning. So the question is on marketing, we didn't see the typical $20 million to $30 million quarter-over-quarter increase we've talked about prior. So, the question is, was that sort of an on the intra-quarter decision and you talked about lower production and lower ARPU spend. I'm trying to understand what that actually means. And then there was no change, even though you said it was going to be, it could be at the -- slightly below the annual guidance range, but there was no change to the overall expense guidance. Just a little color on that.

Tim Hockey -- President, Chief Executive Officer

Yeah, so Rich, specifically on marketing, call it two forces, we'd like to hold our Chief Marketing Officer accountable to, the first one is to make the efficiency of spend constantly improve and then there is the market environments inside the months in the quarter. And so you've heard us say in the past when there is a high degree of retail engagement that we like to fish while the fish are biting and that means we up our advertising spend to react to that and we can turn pretty much on a dime on that front. The same is also true in that the opposite is also true, I should say, when the retail engagement diminishes a little bit. So, we pulled back and that's probably what you saw. Yeah, it was an increase, but it was a little less of an increase than you would've expected in the March quarter and so we will calibrate the spend overall relative to the environment that we're in, but knowing that fundamentally the longer-term driver is to get more and more efficient with every dollar spend for accounts, which has been the long-term trend.

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah. And when we say production we mean creative cost structures.

Tim Hockey -- President, Chief Executive Officer

Yeah.

Steve Boyle -- Executive Vice President, Chief Financial Officer

So media spend less impacted than the overall advertising spend.

Richard Repetto -- Sandler O'Neill -- Analyst

Understood. Okay and then my follow up would be my favorite topic. Tim, on the revenue synergy side, any update there, you did mention something about Scottrade and the options, the increase in derivative trades, and I know that they were well below -- Scottrade on the option trades were well below the percentage that Ameritrade had. Any color on the improvement there or revenue synergies overall?

Tim Hockey -- President, Chief Executive Officer

Yeah, I'd say, just as we've -- we talked about the last few quarters since the integration, we are very pleased at the level of Scottrade revenue synergies. We said $300 plus million in five years, then it feels like we're about a third of the way there already in terms of sort of macro numbers. Some additional color, yes, it comes through with much of the trading activity that is easier, the wallet -- share wallet penetration is just a slower thing and that -- we're actually seeing that in our conversation about NNA, for example, you remember the Scottrade clients all of a sudden had a bunch of different new locations, new staff members, new systems to get introduced to, we did the integration about a year ago now, but they were only what we call the receding which means reintroduced to their new branch and staff and that only happened about six months ago. So that sort of wallet deepening exercise is always a longer term thing, but the overall numbers are great and the economic so far and the revenue synergies are coming up very well.

Richard Repetto -- Sandler O'Neill -- Analyst

Okay, great. Thank you. Thanks for the info.

Operator

Next question comes from Michael Carrier with Bank of America. Your line is open.

Michael Carrier -- Bank of America -- Analyst

Hi, thanks, good morning.

Tim Hockey -- President, Chief Executive Officer

Good morning,

Michael Carrier -- Bank of America -- Analyst

Steve, maybe first question just on the expenses, you mentioned just given the weaker backdrop in the quarter and it looks like it's continuing in April. Just what are some of the levers that you have if or maybe in this for another quarter or two, particularly on the trading side and I think you mentioned still looking for like positive operating leverage and I think in the past you mentioned like 200 basis points. I just wanted to get an update there, are you -- you feel like you can still generate that in a lighter revenue backdrop?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, great question. So, we are committed to positive operating leverage even as revenues --revenue growth diminishes. We have seen a little bit of weakness here, we are sort of turning the ship on expenses, and so I think we talked to and gave guidance this year that you sort of a normal expense year would be 2% to 4%, this year we might have been more 4% to 7% as we did incremental investments. I think you're going to start to see some of those investments pay off, that will start to drive our expenses lower and then some of the discretionary spending and whatnot, I think you'll see us tighten up on. So we would expect gradually to reduce the rate of growth over time and probably next year be more in that 2% to 4% -- normal 2% to 4% range. So, we are quite conscious of it and driving it down slowly over time.

Tim Hockey -- President, Chief Executive Officer

Michael, if I could just add on, you've heard us say this before, we thought the benefit of very strong revenue growth, very positive revenue tailwinds, interest rates, taxes, et cetera, et cetera. So all of those are -- have been helpful to allow us to invest over the last couple of years amplified by the additional efficiency we've been getting in our tax spend. So that's been -- it's been a great opportunity for us. As revenue slows, the team here knows very clearly that we will operate under an operating leverage paradigm and so on the other hand, relative to the other business that I've run in the past, the nature of the volatility in revenues, trading levels, et cetera, can be -- call it more volatile in this business than others I've run, and so I don't want to have a fire drill-type exercise where people try to have hit operating leverage of 2% exactly every single quarter that would be -- that would drive frankly dumb decisions about cutting projects that are close to completion, et cetera, et cetera. So as revenue curtails over the next couple of quarters, we will bring this down and the team has the message, but it's a -- it's a very firmly held paradigm but it's over a fewer quarters as opposed to just every single quarter obviously.

Michael Carrier -- Bank of America -- Analyst

Great, OK, that makes sense. And then maybe one follow-up just on the interest rate sensitivity. You guys included both the positive 25 basis points and then the potential cut by the Fed, which I think is helpful. I just wanted to get some context around, I think the range was maybe $0 million to $75 million, so obviously a wide range, but just what kind of goes into like the low end versus the high end and hopefully we're not, things are getting a little bit better, so we don't have to go through that anytime in the near term, but just wanted to get your thoughts there.

Tim Hockey -- President, Chief Executive Officer

Yeah, so, great question. We have a decent amount of flexibility on the sensitivity and if we do get a rate cut at some point in the future obviously, it'll be a different environment than we've had for a while. We don't do this in a vacuum. We do pay attention to what competitors do. And we've seen in this cycle that competitors have been pretty rational on pricing. So the range that we gave, essentially the high end of the range would say that we sort of replicate, we reversed the betas that we had on the way up on the way down. We don't get hit too badly because we do have a lot of our investments in fixed which is hurting us a little bit today, but will obviously help us if rates go down and then the more positive number would say if we aggressively bring rates down or we lag on our margin rates on the way down a little bit that you could see a much lower or even no impact due to declining rates. So that'll be a game-time decision but we do have a fair amount of flexibility there.

Michael Carrier -- Bank of America -- Analyst

Okay, thanks a lot.

Operator

Your next question comes from Bill Katz with Citigroup. Please go ahead.

Bill Katz -- Citigroup -- Analyst

Okay, thank you very much. I think you mentioned in your -- some of your prepared commentary last night that could be at the low -- especially below the low end on pricing within the trading business. So I'm wondering if you could flush it out a little bit. Is it a function of mix? You also mentioned pricing as well. Just sort of wondering where you're seeing the incremental pressure?

Tim Hockey -- President, Chief Executive Officer

Yeah. So, I think, it continues to be a pretty competitive environment. So we feel pretty good about headline rate, that seems to have calmed down a lot, but there is still a lot of hand to hand combat out there. We have increased the sophistication of our negotiation tools where we're working on a customer by customer basis, but if we need to save good customers, we are continuing to negotiate. So we do think there's going to be some continued albeit moderate pressure on commissions going forward.

Bill Katz -- Citigroup -- Analyst

Okay. And just as a follow-up. I would just come back to expenses for a moment. Just trying to make sure I understand dynamics a little bit better. I think I read last night that on one hand, you sort of feel like there is the opportunity for operating leverage, but on the other hand, I sort of thought the guidance was that your next couple of quarters could look like this quarter ex the ad spend. So, it is sort of -- the second half of this fiscal year is sort of baked in and where the operating leverage would build be 2020 as the pace of growth slows or is it a little more flexed within the second half of this year as well?

Steve Boyle -- Executive Vice President, Chief Financial Officer

I think our comments were relative to today's situation and I think to the extent that we see additional weakness that's unexpected. We do have some levers to pull there, but to Tim's point, we think that it will be a gradual grind down and that the bigger impact will be on 2020 expenses than on expenses the rest of the year.

Bill Katz -- Citigroup -- Analyst

Okay, thank you very much.

Operator

Your next question comes from Michael Cyprys with Morgan Stanley. Your line is open.

Michael Cyprys -- Morgan Stanley -- Analyst

Hey, good morning, thanks for taking the question. I saw recently that you guys recently announced the decision to I think sell or exit part of your retirement plan business. I'm just wondering if you could talk a little about what specific business that is that you are exiting or selling and could you talk about what the proceeds might be and how you think about redeploying that as well?

Tim Hockey -- President, Chief Executive Officer

Yeah, so let me start and Steve can talk about the economics. This is a business that is what we call TDARP, TD Ameritrade Retirement Plans, and it's something that we had been sub-scaling, it was a bit of a bolt on, it was something that we want to continue to be able to offer to our RIA clients, but when Broadridge came to us and made an offer because they are much larger player to be our supplier inside that stack, we thought this is a great opportunity to focus on the business a little bit more.

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yes. So there are really two parts of the business. So one was business with third party administrators, and that's the part that we sold. We are remaining in the, what we call TDARP, which is our business providing retirement plans for RIAs and we are going to have Broadridge help us with some of the back-end servicing on that but that's still going to be available to our RIA clients. So, it was really just creating a little bit more focus within the business on what we think is core to our future and to your point, we do expect a small gain on that and we'll talk more about that in the coming quarters as that comes to a close and what we plan to do with the proceeds...

Tim Hockey -- President, Chief Executive Officer

The way to think of it is we're still in the business, we've just outsourced the custody at a cheaper and a more efficient level, and so we think this is a great way to redeploy our own internal assets to something that is more on point and to partner up with Broadridge given they are good at the back office end.

Michael Cyprys -- Morgan Stanley -- Analyst

Got it. Okay, thanks for that. And then just a follow-up on your stock plan business, I saw you also made some recent moves, partnerships this past quarter there, if you could just talk a little bit about some of those recent initiatives there, how, maybe a little bit of color about your stock plan business today? How big it is? How you're thinking about the opportunity set? And then also related to that curious your views around the opportunity set with private companies, private shares, opportunity for helping broker and provide liquidity to firms that are staying longer in the private markets and the opportunities that you see there for stock plan?

Tim Hockey -- President, Chief Executive Officer

Yes, thanks. So, honestly, we are a bit surprised when our announcement about our new relationship with Certent went out this past year. It's been a bit of a change but stock plan services is still a relatively small business for us, but we have aspirations for growth and we thought reestablishing a different mix and a relationship with Certent was important as part of that. But it's still relatively small, we focus on the smaller to the middle-market plans and one of the things that Certent allows us to do is to work with private companies, but our current system did not. So, it opens up some opportunities for us to fuel our growth.

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yes, and the new relationship is going to allow us to pride a little bit more of a customized TD Ameritrade offering and we think that will be positive in the future.

Michael Cyprys -- Morgan Stanley -- Analyst

Okay. Thank you.

Operator

Your next question comes from Chris Shutler with William Blair. Your line is open.

Andrew Nicholas -- William Blair -- Analyst

Hi guys, good morning. This is actually Andrew Nicholas on for Chris. Maybe first a question for Tim. What kind of growth rates do you aspire to as a management team organically if you're not getting out from higher rates and if the trading environment is more steady state? Are you placing any more emphasis on looking at acquisitions given the slow organic growth outlook? And if so, what are the areas we should be thinking about?

Tim Hockey -- President, Chief Executive Officer

Yeah, so in terms of a growth rate from an asset point of view as you know, we always like to get to the high-single digits, but we're sort of in the mid-to-high single digits now. Revenue is more an environment as we said of trading itself and interest rates and as that abates then you look to get the operating leverage we've been talking about. Your question specifically around acquisitions or not, I mean, let's, as we've always said, it's a pretty standard answer, we will take a look at anything that makes sense for us both strategically and financially. There are some opportunities perhaps remaining in a consolidating industry, but at the end of the day we have got to make sure that we're winning the day in and day out battle for the next client that we're focused on. So, yes, revenue growth is going to be tougher in the outlook that we are now seeing given the pretty significant shift in interest rates, but on the other hand we are very, very confident in our strategy and our business model and we're starting to see it take root.

Andrew Nicholas -- William Blair -- Analyst

Great, thank you. That makes sense. And then changing gears a little bit, I think in the prepared remarks last night you mentioned an enhancement rolled out two new advisors via the end client website. And I think one of the things you had mentioned was some new cash management functionality. Just hoping you could maybe add a little bit more color to what that would be and give a little bit more detail there?

Tim Hockey -- President, Chief Executive Officer

I'm actually trying to think about that we certainly the client advisor...

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yes, so what we've tried to do, I don't, I'm not sure on the cash management thing, what we've tried to do is, we've rolled out a new advisor client platform. So in the past when our RIA ultimate client looked at our materials, it looked a lot like our client website and now we've customized that. So, they have a special, more simplified view for investors to meet their needs.

Tim Hockey -- President, Chief Executive Officer

A couple of other features that we talked about, obviously the new virtual agents, chat functionality, ability for clients to move money themselves versus the advisor client, it's sort of more self service, simplifies the experience and they like it a lot and they like to have, it takes a lot of the administration away from the advisors answering those questions themselves.

Andrew Nicholas -- William Blair -- Analyst

Sounds good. Thank you.

Operator

Next question comes from Dan Fannon with Jefferies. Please go ahead.

Dan Fannon -- Jefferies -- Analyst

Could you expand a bit on the trend in kind of interest earning assets obviously margin has come up a bit here in the March quarter. Maybe talk briefly about what it's done in April, but also then said cash and then the other bucket have moved a fair amount in the quarter, kind of some of the dynamics there?

Tim Hockey -- President, Chief Executive Officer

Yes, so we saw a nice bump up in March and in this quarter as the markets have recovered. We would expect our margin to recover as well. We don't give out anything on April margin balances. Obviously, we'll do our monthly disclosures going forward and we're pretty optimistic that if this environment continues that margin should continue to grow for us. The said cash item was really just an anomaly, at year-end, the way we do our weekly said calculations, we had a bunch of money that looked to be corporate cash that was locked up very soon after quarter-end. So where we are now is more indicative of what we'd expect in the future.

Dan Fannon -- Jefferies -- Analyst

Okay and then just in terms of the buyback, I guess, Steve, how would you characterize this quarter in terms of activity and it's been kind of a little bit up and down the last few quarters. And so, just want to think about the program and any kind of curtailments that we might see going forward or should we think about a more steady state kind of for the remainder of this year?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yes, so we're pretty focused on the annual guidance and we feel pretty comfortable with that, we're trending toward the high end of the announced range that we had and so you may see some bumps quarter-to-quarter based on timing and whatnot, but we would expect to be pretty consistent buyers of our shares over time.

Dan Fannon -- Jefferies -- Analyst

Good, thank you.

Operator

Next question comes from Brian Bedell with Deutsche Bank. Please go ahead.

Brian Bedell -- Deutsche Bank -- Analyst

Great, thanks very much. Hey Tim, if you could maybe characterize client behavior. A little more sort of you coming into the end of the first quarter and into April, in terms of obviously at the slower DARTs that you disclosed, but we've also seen pretty good growth in your ETF marketplace. I'm just trying to get a sense of, are clients doing more investing through ETF -- through your ETF marketplace or did you see more engagement in trading and looking at your net buy and sell, obviously which is really strong in the first quarter, are they continuing to do that in April and is that sort of coming out of cash so to speak?

Tim Hockey -- President, Chief Executive Officer

Yes, so as you noted, very strong net buying in both retail and institutional. I would say the tone is we are cautiously optimistic that there has been obviously a very significant drop in the VIX in this past quarter. So the trading levels were low but clients were taking the opportunity to get back into the marketplace and take advantage of the lower prices at the end of last year and have obviously bidded up. In the ETF market center, we've now got over $40 billion and so I'd say there continues to be interest in products and as we said a little bit of a cash sorting has moved us more into the fixed income, higher yielding instruments over the last little while.

Brian Bedell -- Deutsche Bank -- Analyst

Right. And based on how you're seeing that trending on the disclosure in the DARTs, do you see that trend continuing -- those trends continuing into April based on that what we're trading...

Tim Hockey -- President, Chief Executive Officer

Yeah absolute trading levels (Technical Difficulty).

Brian Bedell -- Deutsche Bank -- Analyst

I mean, in the more like client cash deployment into the markets and into the ETFs.

Tim Hockey -- President, Chief Executive Officer

No, as we said earlier, that seems to be abating from rates from levels that were a little higher in the previous quarter. So we're seeing that sort of continue to -- as you'd expect given the interest rate outlook and what's happened to the curves.

Brian Bedell -- Deutsche Bank -- Analyst

Great, OK. And then the follow up would be on the BDA strategy in terms of, maybe, Steve, the floating rate portion of that at 19%. Just thinking about that going forward and your extensions are now at the five-year, I guess, both, how do you view where you might want to keep floating balances at going forward and what type of spread you would like to see to get you back into the seven-year extensions?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, so we have historically tried to stick pretty closely to our hedge profile. We saw the percent of floating balances tick down a little bit, and it spiked at year-end as we got sort of that surge of RIA cash in the calendar fourth quarter, the first fiscal quarter. We'd expect to be pretty consistent over time. We think that staying in fixed allows us to guard against our rates going down, but 19% is pretty consistent with I think where we'd like to be over the future. In terms of the seven-year, we'd like to see sort of normalization to the historic five-year seven-year spread before we start extending at the seven-year point in the curve again.

Brian Bedell -- Deutsche Bank -- Analyst

Right, OK. And if client cash continues to move down, would you, how would that impact your positioning on the floating portion of the book?

Steve Boyle -- Executive Vice President, Chief Financial Officer

We have a lot of flexibility. So we don't see any issues in maintaining our floating-rate balances.

Brian Bedell -- Deutsche Bank -- Analyst

Got it. Okay, great. Thank you.

Operator

Your next question comes from Kyle Voigt with KBW. Your line is open.

Kyle Voigt -- KBW -- Analyst

Yeah, first can I just ask a follow-up on the last question, but just in terms of this tax season specifically, there's been talk of tax reform causing some higher tax bills for individuals. Just wondering if you can comment there if you're seeing anything different this year versus prior years?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, great question. We've asked the question because you do see it exactly this time of year, the cash outflow is generally to pay taxes. So we went back and looked at it on relative to other years, doesn't seem to be really an outlier although I wanted the exact same thing whether you'd see with less supposed funds coming that there would be more cash, doesn't seem to be a larger driver, a little tough to tease out.

Kyle Voigt -- KBW -- Analyst

Okay. And then just another question on just the corporate cash balances, I think you have close to $1.1 billion in excess cash on the balance sheet, just wondering like what's the right level or the minimum level that you're kind of willing to go down in terms of corporate cash and then how should we think about uses of that cash over time being deployed?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, we don't give out a detailed number or a specific level, but we do have plenty of liquidity right now and we're going to continue to discuss those opportunities opportunistically as we go forward.

Kyle Voigt -- KBW -- Analyst

Thank you.

Operator

Next question comes from Patrick O'Shaughnessy with Raymond James. Please go ahead.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Hey, good morning guys. So, first of all, thank you for the additional detail on your client asset composition and one of the things that I think kind of jumped out to me was the client fixed-income assets were up I think it was 26% year-over-year in the March quarter. Are clients using fixed income instruments as cash alternatives or is there something else going on with that asset bucket?

Tim Hockey -- President, Chief Executive Officer

Yeah, that's part of the sorting people are doing as they're trying to figure out what's the instrument that's right for them. So we've seen a trend up in that category absolutely.

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, I think what you're seeing Patrick is the attractive rates on brokered CDs on our platform are driving some client interest, and so that's included in that bucket.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Great. And then there was a footnote in your Q&A where you spoke to -- where you mentioned client pay changes in early April. Can you provide a little more color on what those client pay changes were specific to the BDA?

Tim Hockey -- President, Chief Executive Officer

Oh, we made some very minor adjustments in some of the lower tiers as we figure out what client sensitivity. Sorry, we weren't sure what you're talking about. Yeah, we tweaked the rates basically very, very -- in minor ways in some of the tiers insider our BDA.

Steve Boyle -- Executive Vice President, Chief Financial Officer

So what we try to do is look each month at our client behavior and see where there are opportunities to make changes and so we are just able to tweak a couple of rates there and some tiers that we thought were quite price sensitive.

Patrick O'Shaughnessy -- Raymond James -- Analyst

All right. Great, thank you.

Operator

Next question comes from Brennan Hawken with UBS. Please go ahead.

Brennan Hawken -- UBS -- Analyst

Hey, good morning. Most of my questions have been answered. Maybe just a few follow-ups, so on the point there about potential brokered CDs, have you approached potentially TD given the relationship that you guys have with them, the BDA that you offer to consider whether or not there might be some chances to term out some of these deposits with clearly a strategic partner in a way that could help improve the economics for everyone involved?

Tim Hockey -- President, Chief Executive Officer

We're already terming out our BDA. We do have a lot of options in our brokered CDs right now. TD tends not to be a big offer of brokered CDs, but we have a whole stable of banks that provide lots of different brokered CD option. So it's a pretty robust part of our offering for our clients and in terms of our own money that swept, we have a significant amount of flexibility as to where we want to invest those.

Brennan Hawken -- UBS -- Analyst

Yeah, when I said term, sorry, I meant terming the customers out. Obviously, we know that you guys go into the latter, but, OK, if they are not big into that offering then that's not going to work that well. And then just a follow-up on the Certent point, so it seems like you guys are approaching this from a white label perspective, is that right? And does that suggest that it's going to be kind of a long-term commitment to use their technology and then through the course of that are you looking to build up some particular skills and capabilities within your own employee base around some of these plans. Can you kind of put a little more meat on some of the bones around how you guys intend to approach it strategically from your perspective as far as the capability goes? Thanks.

Tim Hockey -- President, Chief Executive Officer

Yeah, so first of all, strategically, yes, it's a growth opportunity for us, albeit small as we said. So our Certent deal, I think we signed is a three-year deal, but we would expect that to continue to grow. Your question about whether it is white label. Yes, that's correct. And we have a very capable and dedicated team in our stock plan services business and we're looking forward to great growth from them, but it's again just a relatively small part of our business.

Brennan Hawken -- UBS -- Analyst

Thanks for the color.

Operator

Next question comes from Craig Siegenthaler with Credit Suisse. Your line is open.

Craig Siegenthaler -- Credit Suisse -- Analyst

Good morning. I just wanted to see if you could update us on your thoughts between the spread between client asset and revenue growth. Just because excluding spread revenues, we have seen a long-term decline in the ROCA and I just wanted to see if you had any thoughts on the forward trends?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, so, we do see a little bit more growth in our institutional business that tends to be a little bit lower revenue business, but a lower expense business as well. And so we think we get great profit margins in all of our businesses and that we should be able to continue to grow EPS, which is really our key focus.

Craig Siegenthaler -- Credit Suisse -- Analyst

Then just as my follow-up on investment product fees. They continue to tick down here and I think you attributed most of that to the ETF center growth, but that will probably grow faster than the overall business going forward, so is there any reason that this line shouldn't continue to tick lower and is there any other items in there?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yeah, so there were a couple of timing items both in the fourth quarter, calendar fourth quarter, the fiscal first quarter, and this quarter, so that rate on investment product fees was probably just a little bit high in the first quarter and a little bit low this quarter. So I think you'll see that bounce back as we move forward. Other than that, we would expect it more to grow with balances.

Craig Siegenthaler -- Credit Suisse -- Analyst

Thank you, Steve.

Operator

And we have a question from Steven Chubak with Wolfe Research. Please go ahead.

Steven Chubak -- Wolfe Research -- Analyst

Hey, good morning.

Tim Hockey -- President, Chief Executive Officer

Good morning.

Steven Chubak -- Wolfe Research -- Analyst

First question I had was on the client cash balance disclosure. I certainly really appreciate the fact that you guys are willing to provide the additional detail. I was hoping that you could give us some rough numbers for what the rough fee rates are across each of the different -- across the four cash buckets that you listed, just so we can more accurately forecast the revenue impacts in the event some of those cash sorting dynamics persist?

Steve Boyle -- Executive Vice President, Chief Financial Officer

Yes, no, we don't give out that information. So it's all blended in the investment product fee number, which has been pretty stable over time.

Steven Chubak -- Wolfe Research -- Analyst

Got it, OK. And just one follow-up for me on the subscription pricing model, it's an idea that's been thrown around for the trading business. And I guess the hope is that it could be perceived by the marketplace as something that's higher multiple, drive more predictable and sustainable fee streams. I was wondering if you can update us on how your thoughts have revolved around the prospect of maybe launching a more subscription-based model?

Tim Hockey -- President, Chief Executive Officer

Yes, I think generally and probably driven by the tech industry, there is quite a shine on subscription based models, but I would broaden that out to say that there's multiple pricing options and models that one can take when looking at any industry, in any business and so we've got some work under way as part of our strategy work to say what are those options available to us and which are the most attractive and which would be palatable from a client's point of view. So, nothing to talk about here other than we're always looking at it, subscription models are interesting, but there's other versions that we could consider as well.

Steven Chubak -- Wolfe Research -- Analyst

Great, thanks for taking my questions.

Operator

At this time, I will turn the call over to the presenters.

Tim Hockey -- President, Chief Executive Officer

Great. Well, thanks everybody. Appreciate a lots of calls and lots of ability to give some color on the results. As we said, I think, in hindsight, when we looked at the tone that we had set in the prepared remarks, it sounded like it was a little bit more dour than we had anticipated, but frankly, as I said, we're quite confident that our client first strategy is working and our client satisfaction scores are up nicely actually in the quarter, which we're happy about and we see some bright lights in terms of organic growth in the future notwithstanding a slightly slower Q2. Thanks everybody for calling in and we'll talk next quarter.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 41 minutes

Call participants:

Devin Ryan -- JMP Securities -- Analyst

Tim Hockey -- President, Chief Executive Officer

Steve Boyle -- Executive Vice President, Chief Financial Officer

Chris Harris -- Wells Fargo -- Analyst

Richard Repetto -- Sandler O'Neill -- Analyst

Michael Carrier -- Bank of America -- Analyst

Bill Katz -- Citigroup -- Analyst

Michael Cyprys -- Morgan Stanley -- Analyst

Andrew Nicholas -- William Blair -- Analyst

Dan Fannon -- Jefferies -- Analyst

Brian Bedell -- Deutsche Bank -- Analyst

Kyle Voigt -- KBW -- Analyst

Patrick O'Shaughnessy -- Raymond James -- Analyst

Brennan Hawken -- UBS -- Analyst

Craig Siegenthaler -- Credit Suisse -- Analyst

Steven Chubak -- Wolfe Research -- Analyst

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