Ameritrade Reorganizes Into Two Units

Online brokerage Ameritrade (Nasdaq: AMTD) announced a major restructuring Wednesday.

The reorganization creates two business units, one serving private clients and the other institutional clients. As part of the reorganization, Ameritrade introduced the positions of chief strategy officer and chief administrative officer.

“We are in a cyclical business and Ameritrade has faced adverse conditions for more than a year,” Ameritrade chief executive officer Joe Moglia said during a conference call with analysts. “This is a big step for our company, but it’s just the first step.”

Moglia added that “through this reorganization, we will maximize our existing assets by deploying every Ameritrade employee to either directly serve clients or directly support someone who does.”

Private Clients Division

Ameritrade’s private client offerings range from Freetrade, its bare-bones service for traders who want no investment tools or personal assistance, to Ameritrade Pro, for traders who want long-term investment research and portfolio investment tools.

The company said it will also be rolling out new products and services to meet “the varying needs and investing patterns of different private client segments.”

Heading the private clients division will be Pete Ricketts, son of Ameritrade founder and chairman Joe Ricketts.

Institutional Division

Ameritrade’s new institutional division will initially target seven institutional client segments. Among these will be co-branded online brokerage services for banks and financial institutions, order management and decision tools for money management clients, retirement services offered in conjunction with 401(k) providers, and clearing house services for brokers and dealers.

Moglia said the institutional division would be driven by a sales team that would reach out to both existing and new customers. Heading the institutional group will be Vince Passione.

Management Realignment

As part of the Ameritrade restructuring, it realigned its executive management team to “streamline the company’s reporting structure, drive the growth of its private client and institutional businesses, and dedicate resources to the long-term strategic direction of the company.”

Pete Ricketts and Passione will both report directly to Moglia, who will continue to report to Joe Ricketts.

Phylis Esposito, the company’s new chief strategy officer, and Kurt Halvorson, the new chief administrative officer, will also report to Moglia, as will the company’s chief financial officer, general counsel and co-chief information officers.

Swimming with Sharks

Ameritrade and its fellow online brokerages have been caught up in the overall dot-com slump. Ameritrade announced in April that it was slashing its advertising budget by roughly 25 percent and pink-slipping between 270 to 300 workers, or 14 percent of its payroll.

Charles Schwab has also said recently that it planned to cut about 13 percent of its workforce, due to market conditions and lowered trading volume. At the end of May, CSFBdirect.com said it was slashing 180 positions, or 14 percent of its domestic employees, due to a downturn in online trading activity.

Online brokerages have also been beefing up their offerings, attempting to win new customers and survive the downturn. Ameritrade said last week that it was adding pre-market trading and a portfolio service, and E*Trade announced the addition of mortgage services to its lineup.