Essential wisdom of a star CFO
How did TD Bank purposefully build one of the world’s best IR programs? In these segments of the video series ‘ON Message with Neil Stewart’, produced by Bloomberg and IR Magazine, Colleen Johnston gives one of her last interviews as TD’s CFO before becoming group head of direct channels, technology, marketing and real estate at the beginning of 2016 (the interview is from September 2015).
It took TD only five years after vowing to make IR a ‘competitive advantage’ to start sweeping the IR Magazine Canada Awards. It was number one in the rankings from 2011 to 2015 and, in IR Magazine’s first Global Top 50 in 2013, TD was number 10 and the highest ranked bank.
In part one of the series, Johnston explains how she and former TD CEO Ed Clark saw the need for a top-notch IR program to support rapid growth, including major acquisitions in the US. ‘We really looked at every aspect of what we did and tried to make it as modern as possible. But a lot of it really is about [our] philosophy around accessibility, transparency, adding value to your investors,’ she says.
Part 2: Investor dialogue
Investor relations is often called a two-way street, and Johnston describes how TD absorbs the views of investors and analysts on reporting and even how the bank is run. ‘We really listen, and believe me, at our senior executive team meetings, the voice of the investors is always at the table,’ she says.
Part 3: Reevaluating TD's IR effort
After a decade spent building Canada’s best and biggest IR programs with a team of around 12 people, TD began modulating its effort and cut the team to around eight. As Johnston explains, the bigger the team, the more it taps into the bank as a whole, taking up time and resources across the organization. ‘We have to pause and say, Are we overdoing it?’ she says.
TD has also cut costs by developing new ways of ‘touching’ investors and analysts, including TelePresence, or high-end videoconferencing. Another example of doing more with less is an annual conference in London bringing together the CFOs of Canada’s ‘Big Five’ banks. ‘European investors come to us, so that’s a lot more efficient that doing a five-day road trip in Europe, and flying from city to city to city,’ Johnston says.
Part 4: International outreach
One aspect of TD’s long-term IR push was to grow the international investor base. While it has achieved a lot, aided by the high profile of the brand in markets like New York City, TD faced a challenge finding global investors when its valuation was perceived as rich in the run-up to the global financial crisis and even during it, when Canadian banks performed extremely well compared to others around the world.
Part 5: The power of diversity
Johnston led TD’s Women in Leadership initiative throughout her time as CFO and gives frequent speeches on the topic, including an excellent TEDx talk at York University in 2014. She describes how the percentage of women in senior management at TD grew from 22 percent to 37 percent over 10 years (this interview is from September 2015). ‘More importantly,’ she says, ‘it isn’t just about the numbers. Women feel just as confident that they can succeed at TD as men do.’
She goes on to speak about TD’s larger approach to diversity, which covers gender, visible minorities, aboriginal peoples and GLBT employees. ‘The face of Canada has changed. The face of the US has changed. And you have to have the very best people working in your organization,’ Johnston says.
Part 6: Quickfire round
In the final part of the interview, Johnston fields questions inspired by those directed at a panel of other CFOs by attendees at NIRI’s 2015 annual conference. The questions cover guidance, working with the sell side, and the most important qualities of an IRO.