Joe Moglia on Going From Football to Wall Street

Bloomberg Opinion columnist Barry Ritholtz speaks with Joe Moglia, who began his career as a football coach before moving into business and has more than 20 years of experience in each field. He is currently chairman of Fundamental Global Investors, which he also co-founded; chairman of Capital Wealth Advisors; and chair of athletics at Coastal Carolina University, where he was previously head football coach and recipient of multiple Coach of the Year honors. He was also previously CEO and chairman of the board at TD Ameritrade.

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Episode Transcript

Speaker 1 (00:00):
M This is Mesters in Business with very Renaults on
Bluebird Radio. This week on the podcast, I have an
extra special guest and strap yourself in for this one.
It's absolutely fascinating. Joe Mowglia could have the most unique
career I'm familiar with. Not only is he a Wall

(00:24):
Street veteran seventeen years at mary Lynch, eventually rising to
the role of CEO and chairman at t D A
merrit Trade, which is just a giant custodian and trading shop,
but he also has been the head football coach and
defensive coordinator at a number of esteemed college teams. UM

(00:47):
such a fascinating, unusual career, and he went back and
forth between the two of the career several times. It's
really an intriguing career path he took when life basically
threw him a lemon, he really made lemonade and created
one of the most interesting careers in sports and finance. Uh,

(01:09):
there's a ton to learn about him. He's been unusually
successful in both careers and I just found this to
be absolutely fascinating. So, with no further ado, my conversation
with Joe Mowglia, this is Mesters in Business with very
renaults on Bluebird Radio. My extra special guest this week

(01:35):
is Joe Mowglia. He has one of the most fascinating
careers in finance. He was the head coach of a
football team at Coastal Carolina. You from throughen Uh. He
was also a seventeen year veteran at Merrill Lynch before
becoming chairman and CEO of t D A Merritrade, which

(01:58):
was the largest online brokerage firm if you measure it
by daily retail online trades. He is also the author
of two books, The Perimeter Attack Offense and Coach Yourself
to Success Winning the Investment Game. Joe Mowglia, Welcome to
Bloomberg Barry, Thank you very much. I'm excited to be on.

(02:20):
I'm excited to have you, and I have to start
out with your career, which is which is so fascinating.
You began in athletics. You were a college football coach
for sixteen seasons. What made you say let me pick
up a side hustle and finance. Well, there's a little
bit of a story you know, behind this, of course,
but I will jump to the transition time. So I

(02:42):
coached for sixteen years and uh my one who was
my first year as defensive coordinator at Dartmouth and we
had four children, and we were in the middle of
a staff meeting in the sheriff from Hannover, New Hampshire
comes in and he needs to see me, and I
was talked it was a death in the amiss coach,
I'm sorry. He has me divorce papers. So I couldn't

(03:03):
afford to live independently and support my wife before children.
So I got permission to move into a store group
above the football offices. I didn't mind that it was small,
but it had no heat, and this is New Hampshire,
so I could see my breath in the winter. I've
lived there for two years now. My goal as a
coach Artery was one day I wanted to be a
coach of a major major school, you know, in Michigan

(03:24):
and Notre Dame in Nebraska, whatever, but that was my goal.
Well that year January and the Orange Bowl, Miami upset
in Nebraska for the National Championship and their secondary coach,
my card that took the head job at l s
U and the following year that defensive coordinator was going
to Cleveland Browns and they offered me the opportunity to
go down as a secondary coach and then later on

(03:45):
succeed Oliver Dotti, the current defensive coordinator as defensive coordinators.
So I've gone from defensive cordinate in the IVY League
the defensive coordinator in the national championship team. I could
not have a more perfect next step of my career,
could not a bit more perfect. But you know, a
football coach works seven days a week, about eighty hours
a week five months. You don't get a day that's literal,

(04:05):
there's no days off and um and especially back then,
coaches didn't make that much. And I'm going to be
living in Carl Gables, Sparta, where my children to live
with a mom in New Hampshire, and I couldn't afford
to flying back the forth. So the most difficult decision
I ever made was I turned down that job. But
I didn't think I could do that job as a
coach if I couldn't live up to my responsibilities of father.

(04:26):
But that also told me very clearly that means I
can't stay in football. So I made your in economics
and I always had an interest in Wall Street. Uh,
so I thought that I really wanted to pursue a
career on the institutional side of Wall Street. Not easy
to figure out, but ultimately Mary Lynch gave me an opportunity.
In their institutional NBA training program. There were twenty six

(04:47):
of us nbas, I want football coach, and pretty much
everybody said, this football guy is not going to make
you here. But ultimately the majority of those NBA's working
for me and I wanted turning out okay, but that
the transition from football to Wall Street the first time.
So so you were at Merrill Lynch in the early
nineteen eighties at the start of of an eighteen year

(05:11):
bull market. What was it like in those days? That
was a very different world than the world of today
or even the world of the late nineties. I would
agree now, i'd be After I went through my training program,
I became an institutional bond salesman. So it was also
an interesting time in the buying world because I didn't

(05:33):
realize that up until then. But you take a lot
more risks on your trading desk and fixed income than
what you would have in the equity world, and rache
were high, but they did. The bull market wasn't just
in equities, the bull market was also in fixed income
because race were coming down, and uh, there was a
tremendous amount of things that you know, I needed to

(05:53):
be able to learn. But frankly, I already knew how
to handle myself on distress. I knew how to listen,
I knew how to have an impact on people. And
I think I was without question a much better bond
salesman because of my experience as a coach. So so
so for me and I frankly and I became a
pretty prolific bond salesman. And then from there I wanted
moving into executive management. In the late eighties, Mary Lynch

(06:16):
had horrible three in the seventy million dollar mortgage backed
security loss and that was very significant for us the
time back then three seventy seventies, very young money. But
I think Wall Street was learning also that you needed
your leaders, your real leaders, to be an executive management positions,
and they just weren't producers that that wanted getting promoted. Uh.

(06:38):
But my ability to learn was going on the markets.
How critical fixed income, as the role of the FED,
all of those things which have a significant impact on
the equity markets were all those things that I learned
during that period. And we'll talk more about the bond
market later, where where arguably still in the forty year
bond bull market that began back in the yearly eighties

(07:00):
when Vulcar broke the back of inflation. But let's stay
with Merrill Lynch for now. You you were at Mother
Meryll for seventeen years. What was your last role before
you departed? I had I was the first person in
the firm to go from the executive management executive management
team on the institutional side to the private client side

(07:23):
and um. Before I left, I was responsible for all
investment products, the four O one K business, the insurance business,
and the middle market business. So that's a pretty serious
role and it obviously prepped you to become CEO of
t D Merrit Trade. I think that was two thousand
and one. Tell us about the transition from Meryll to

(07:44):
t D What what was that like? Well, I think
that I was leaving, you know, one of the greatest
brands in the history of finance. We were, I think
it's the time. I think we were an eighty billion
dollar company. You know, we had I think sixty seventy
thousand employed days and forty seven different countries. We were
double a rated bond, and I was going from a

(08:07):
company that had incredible stability to a company that was
blowing up as the dot com bubble burst, and um
Merritory was losing a lot of money. The market cap
had gone down about seven million. And I hit that
my homework before taking this job, and I thought it
was probably a ten percent chance we might go out
of business, a ten percent chance we might hit a

(08:28):
real home run, but eight percent chance. No matter what,
I was going to make you better. And then after
I got there, I realized that I though there was
a chance we go out of business. And one of
the things that I learned pretty much early on, I'm
not an expert, that we were really a technology firm
and a financial service wrapper, and we needed to focus
on what core competencies were so we could leverage those

(08:51):
into competitive advantages, so we could be leaders in the
market niches that we chose to participate in. By doing that,
I would take half I got We were seven or
eight different countries, I got out of virtually all of them.
We were doing different businesses and different products. I got
out of all of them, and I took that money
half of it to offset or set the losses that

(09:13):
we were having, and the other half I poured back
into our core competencies. And core compacy was transaction processing
well in the financial world as buying and selling stocks.
And that was when we became very, very very significant
in that arena. And once we kind of got ourselves straight. Now,
the the recession after the dot com bubble buss March

(09:35):
two thousands of market thousand and three, and this is
around the middle of that, and consolidation had not begun
in the industry, and that's when I felt that was
a significant opportunity for us. So so let's talk about
that period that bear market. Um Market peaked March two
thousand around, did not bottom until October two, and then

(09:59):
again a second bottom in March o three at about
a thousand down. I have to imagine that you're running
the hottest online training company at the time. Trading volume
how to have really dropped off a cliff during that period.
What was that like? Well, you know, Barry kind of

(10:20):
you can almost make the parallel to what's going on today.
Back in the nineties when everything was going incredibly well
for everybody, uh the day trader because of the internet,
uh became alive and UM and one of the things
that in Merry Trade did they really did everything they could.
They try to do a lot of other things. So
they tried to focus on the day trader. Strategically, that

(10:43):
was not a great decision because the day traders wants
to market blew up per your reference, the day traders
want up going out of business. So we needed to
kind of restructure our entire business. But it was not
to do something that we couldn't do. It was to
focus on the ability to be able to trade, not
the day trader, just an active trader platform and UM. Uh.

(11:06):
So so at the time the industry that was tremendously
because how that the industry is far greater supply than
there is in terms of demand. But but trades had
certainly significantly dropped off. But by two thousand and three,
doing leading the industry and salivation and focusing on the
emphasis that we focused on, UH, we start we started

(11:27):
to do more trade than anybody else. Let's talk a
little bit about how did coaching prepare you for running
a giant financial organization. I think in terms of UM
I've often said that I was a much better bond salesman,
I think in a Wall Street executive because of my

(11:48):
experience as a coach, and then when I went back
to coaching, UH as a head coach, I think I
was a much better head football coach because of my
experience as a business leader. And UM, when you think
about football, you need to be able to make decisions
very quickly. Your entire career is dependent upon what you
do on Saturday. You have an incredible stressful eighty hour
work week. UH. There are no days off in the

(12:10):
span of a five month season or so you need
to You need to be able to understand people. You
need to be able to motivate, inspire, You need to
be able to discipline, you need to be able to insent. UH.
You also need to have a very very well thought
out strategy that would handle contingencies in terms of your
opponents and what happened. But you have to be able

(12:31):
to simplify that strategy in order to execute. So when football,
you's only about eleven people functioning at once with zero error. H. Well,
in the business world, there are a lot of firms
I think that don't maximize their potential because it sounds
like a grand deal of strategy but it's not simplified
enough to really truly be able to execute. So if
you take all those things together, um, and whether I

(12:55):
was talking about football or whether I was talking about
the business world, Uh, they would really be the same
principles to these Actually, crycipals is the only thing that
different Verry is the product. The product of football is
very different from the product of finance, But the principles
behind running a good business and successful business, being a
good leader and each are really the same. Huh. It

(13:17):
makes a lot of sense to me. I recall that
merger between day Tech Online and t D Waterhouse. I
was on a trading desk um early in my career,
and I have a vivid recollection of my former trading
buddies when I had been By that time, I was
already off the desk kind of freaking out about the merger.

(13:38):
Tell us a little bit about who day Tech was
while you were running t D Waterhouse and what that
experience was like going through a major merger. Okay, it
was about two thousand and two, so I'd been there
almost a year and we had gotten our at straight
and Um, the first deal we did actually was a

(14:00):
national discount broker and they were owned by Deutsche Bank,
and we paid a hundred and fifty four millions to them,
but we had no cash, so we had to do
it in stock when we were worth about seven hundred millions,
and if we had not gotten that deal done right,
we would have gone out of business. And um with
the day Tech deal, we were we were losing money.

(14:21):
They were making money. They were by far our biggest competitor.
They were taking market share from us, and uh, frankly,
they would when they wanted to do something strategic, and
they put together the memo of details associated with trying
to do something like that. We didn't even get that,
and they weren't interested in doing something with us. So
I figured out who the who the leaders were. They

(14:43):
were owned by private equity, the three dominant ones with
t A and Bain and Civil Age, and I actually
flew to Boston and that you know, a private room
with Steve Pauka the Bain, and we kind of worked
things out a little bit on the back of a napkin.
The next day I met with their board and then
shortly there I met with our guys and then eventually
we figured it out. But again once again we didn't

(15:05):
have any cash, so we had to do it for stock.
So this was a fifty fifty deal. So we paid
one billion one fifty for them when we were worth
a billion one fifty and again we screwed that deal up.
We are gone. We were out of business. But we
did had a home run with n Debate and we
had a homelown with day Tech and we were delivered
above and beyond with anybody, so it we would right.
So after the merger, you're now the biggest online trading

(15:28):
firm at least if we're going by daily volume. What
are the challenges of running a big technology company essentially
in that space? Well, while when I got to a
Merriort Trade, while you know, we were really struggling and
from a financial perspective, one thing that that I thought, uh,
merrit Trade did very well in the nineties was when

(15:51):
they went public, they took a lot of that money
they poured into marketing and they poured it into technology.
So I was aware of that before I took the job,
so it said me, eat, I don't frankly, I didn't
know much about online brokerage. I didn't know much about technology.
But there's nothing new in that, but I knew how
to run the business and I had people around me
that all new all those things. So I think with

(16:11):
regard a technology, I think you've got to be aware
of that. You've got to be religious with your fervor
in terms of making sure that you're staying on top
of how can we break down what the contingent plan,
what's going to happen. There's a lot going on. How
are we going to be able to do that? And
you know, we needed to write people in leadership roles
and we needed to make sure that we knew it
was a real commitment our manager's part and as they said,

(16:34):
we really wanted to financial serf. We were really a
technology firm and financial service wrapper. And as long as
you've got your priority straight, that certainly helped us out
significantly over time. So given that you aren't an asset
management shop, you aren't charging fees based on a U
M S. What what did the revenue break down look like?
You know, in between the dot com collapse and the

(16:58):
financial crisis that it's about is modern and era of
online trading that's separate from from today's ear as I
can imagine what were the revenue sources. Was it strictly
execution and trading were and some margin loan lending or
was were there other lines of revenue? Well, there are
basically three ways that I think a broke it firm

(17:20):
to make money with regards to at least with regards
to its trading. The first of the commissions you're charging
in and the second one would be the way you
manage your assets, which are the client assets on the ballancing.
You know, what do you do with those assets? Do
you invest? How do you handle that? That became a
big issue in two thousand and eight, of course that's secondly,
and then the third way to payment fraud the flow.

(17:42):
So there'd be the three ways in effect that you
can make money back then. Back then, though, the dominant,
the dominant um our, dominant revenue stream was for trading
and our commissions. Now in your mind when you're running
this company and trading is sixty. I remember before the

(18:03):
SWAB t D merge, and we'll talk about that later,
I remember reading that it was something like fifty revenue
a t D was trading was a much smaller percentage
of SCHWAB, so it became easier for them to drop
the cost structure. But in your wildest imagination, did you
ever suppose there would be a time when trading would

(18:26):
become free? Well, you know, I think the I think
in Chuck Schwab's book, he actually I think predicted, you know,
back in the early nineties or at some point in
time that you know it might be it might be free.
But I think from a business perspective I talked earlier
about you have to have a thoughtful strategy that handles
contituencies down the road, problems, issues that pop up. Well,

(18:49):
there was no question. You just look at the history
that you know, the uh fees commissions were being squeezed
and squeezed and squeezed, and they were just going to
continue to go down. So we always believe that there
was a shot that one day that made the zero commissions,
and we better be prepared for that. But we didn't
want to waste all of our time on that because

(19:10):
we really had businesses we gotta run. But probably i'd
say pretty much every board meeting there was some discussion.
Almost every board meet there's some discussion about like what's
going to happen if we want to commission want to
go into zero and um, and then eventually, of course,
kind of we got to zero. I think we got
there faster than anybody anticipated when Schwab decided that to
cut commissions to zero. But but but well, there was

(19:34):
always that. We always thought that that was that possibility.
In my head, if I had to guess, I would
have guessed probably that would have happened about two thousand.
So I'm trying to think back to what it was
like then, and I'm only imagining these board meetings. At
what point do you look at margin pressures and say,

(19:54):
we have to continue to get bigger, we have to
continue to get more efficient, and we have to be
the best user of technology of anyone. Otherwise are businesses
at risk? I think from the very beginning that was
the principle. And I think that also the reason. Part
of the reason why I thought it was so important
to leave the consolidation in the industry was because you

(20:15):
wanted scale. But I think the best answer to zero
commissions is a real quality asset base. So the focus
on being able to gather assets also became very, very
important to us. So the consolidation helped us, help help
us with synergies, helped us with scale, help only helped
our profit margins allowed us to grow market share. When

(20:36):
we purchased data. We Meritrade bought TD Waterhouse from TV
Group and that's one became TD and meritratee. But they
also were big in the r I a business, and
that was a business I really want to be in
as well, because I thought that that allowed us to
go after the more serious, longer term investor. And uh

(20:57):
so you're you're spreading your risk out over the different
types of investors that actually out there, not just the
trader or the active trader, but also the long term investor.
And you're gathering assets while while we go. So when
we did, you know, when when we announced the Schwab deal,
I think we're at about one point five trillion in assets.
You know when I began that, we had twenty four

(21:18):
billion in assets. So making sure your technology was top notch,
always testing it, making sure you continue to prioritize where
you're where you're going to invest capital, and the consolidation
growing assets. Uh it was all part of the plan,
and you know it was it was very very effective,
quite quite fascinating. So let's talk a little bit about

(21:41):
this business of free trading. And I have to start
um with the obvious question, Hey, I learned in economics
there's no such thing as a free lunch. Is free
trading really free? Or are there costs that we're just
not aware of as as traders. I think you've got
to look at that from two perspectives. First, do it

(22:01):
from the perspective of the trader. Uh. So, everything is
pretty simple. You go to your website, boom boom boom,
You put in the trade and gets executed almost always instaneously,
and you get you get you have to get the
best execution at that moment in time of the marketplace,
and all the time you actually get, uh, you get
price improvement. Right, that's what you see a front and
that course you zero. Now look at the back end

(22:23):
behind that, you've got the zillion dollars worth of infrastructure, technology, regulatory,
many many, many different things that need to take place.
So when you do the trade, it goes through the
broker right to the market maker. The market maker in
effect has a spread. They have to give the client
the best, the best execution. At that time. You decide
as the broker how much price improvement you want to

(22:45):
give them, and then you keep the rest in robes
of prayment porta flows. So the way you pay for
this is through the payment porta flow. So on the
front end, the client really does get excellent execution and
here or she is pay getting it for. But at
the back end, this tremendous expense involved as well as
UH complexity, and that gets taken care of by payment

(23:08):
wort flow. So to simplify that, back in the days
when it was eight dollar trades or ten dollars or fifteen,
I think the last we saw it was about seven
bucks the trade. There wasn't that necessarily that payment for
order flow. Were traders getting better execution less spread going
to the market maker back when trades had a fee

(23:31):
attached to them. From the time I showed up at
a merry trade, you know, the number one priorities make
sure we take care of our clients. So it was
always a commitment to make sure that they got uh
the best execution. Now, when you were making money back then,
I'm sorry, when you were when you were charging fees
back then, you did. You got both. You've got the
commission as well as the spread payment porter flow. But

(23:53):
the client was still getting best execution, but they were
paying eight dollars or five dollars or seven dollars or
whatever that was. Now keep the mind to bury back then,
you know, technology was not as good as it is
twenty years later when mission went to zero. But it
was good, but not the way it is today. And
obviously technology improves a mystically from one year to the next,
certainly from every two or three years to the next

(24:14):
two or three years. So so you had that going on.
But with regard to that, the individual investor still would
get price improvement. So when I stepped down, when we
by the time we closed our deal on the we
on the payment porter flow piece that we were able
to control the we gave price improvement on a ratio

(24:35):
three and a half to one, So the client benefited
three and a half to one times what we would
have benefited from it. So this raises the question our
custodians able to make up the lost revenue? Are they
getting it from somewhere or is this just becoming an
increasingly low margin business When when we look at a
shop like Schwab, I think the number I saw when

(24:58):
they announced the t D deal was that of the
revenue came from the float, from the money they made
on cast sending around overnight. Right. So so the way
the way you make money, you can make money by
your commissions and they go away, then you have to
pay moreford fold. But then you have your asset base

(25:18):
and the ability of any broker, firm or bank to
re to take those assets and reinvest those is another
way for to to generate incremental revenue for that particular
firm or bank. Uh. Now, I think I think when
you when you look at that situation specifically, uh, you
also start to recognize them as as interest rates. With

(25:40):
higher interest rates, you know you can you can you
can take advantage of the yield curve there where you
might be paying one to the client going three years
back now, but you might be able to make three
or four or five pc in the case of a bank,
maybe doing a mortgage in the case of US investing
in fixed income type securities. But you would You've got
to manage that because is your ballacy and you still

(26:02):
of course of the liability to to to your client base.
But they're the different ways you make money. I would
like that one more point that's off trading. So keep
in mind that that you want to be able to
diversify from treating as much as you reasonably can. So
therefore the growing of the assets, the use of the
ira A, the R, the use of of robot type

(26:25):
portfolios and different asset allocation tools and risk measment tools
help you do that help you be able to diversify.
Maybe getting involved more with Criticum is another way to
be able to diversify. So you want to be able
to to diversify your revenue stream away from trading. But
with regard to the trading, you still make money to
pay more for the flow as well as what you

(26:46):
do with the assets. When you have very low interest
rates as we do today and have for a while,
that's more difficult to do. Huh. So what do you
think of apps like robin Hood that have gamified the
concept of trade aiding, especially for young inexperienced UM people
who are you know, board stuck at home and and

(27:09):
robin Hood makes this kind of fun. Well, I think
number one, I think it is great that we've got
you know, younger people coming into the marketplace, even if
they're coming in initiative day traders. I think because those
people are so acquired and so connected and have played
games themselves, but are certainly incredibly efficient with regard to
what they have got to technology. I think the idea

(27:29):
of gamifying that was I think probably a pretty good
marketing tool. And uh, with the leadership that that the
retail investor has, the day trader rather has seen from
the Reddit and the asked Kevin's of the world, etcetera. Uh,
you know, they've been able to put on some pretty significant,
pretty significant trades. The concern that I have is that,

(27:50):
so I give the retail investment lab credit for that,
but the concern I have is that think back to
the nineties when the dot com bubble worst. It was
significant day traders in the nineties, they went out of
business at some point in time. We've had a pretty
significant bull running here on eqtually is the last five years,
the last two three years. You know, we've had some

(28:11):
really good day trading going on. But at some point
the market is going to turn and and I think
it's it's behose the Robert Hoods of the world. A
merrit trade does this, Schwab does this, now it schwab
Swab does this. Other firms that have been around a
while do this. But you've got to do You've got
to educate your client. So, for example, let's say you
have a game stop trade on you know, you bought

(28:32):
it a ten, and it goes to, well, should you
have taken something over the table? No, We're gonna wait
to two. It gets to it takes something on the table.
I think you need to to help people understand how
to manage their risk win in those situations. Because of
the markets really turned around and go the other way
for a prolonged period of time, I would think that
the fate of the day trader would be similar to

(28:54):
what it was in the nineties. You know, that makes
a lot of sense. The other question I wanted to
ask you about online trading. I don't remember which CEO
said this it It could have been Tim Buckley at Vanguard,
But one of the questions um that have come up
has been about cybersecurity. How much should this be keeping

(29:16):
the people running current trading shops up at night these days?
How dangerous is the risk from hackers and others accessing accounts,
and how much more work needs to be done to
make sure that there's an increased level of cybersecurity for
financial firms. Whatever the most is a firm can do,

(29:39):
they probably have to increase that, So it's got to
be the number one priority. I know, when I was
asked a lot of time than using the term that
you just used to know what would really keep me
up at night? And I knew we were doing a
really good job with with executing our business plan, and
I knew we're doing a great job with our operation
with our people, etcetera, etcetera. But at the end of
the day, we're doing everything we and to make sure

(30:00):
our technologies fail through. But you know, you know that
nothing is perfect. And what happens if we get blindsided?
What happens if we get a hacker. Now we we've
got people who do nothing to try to hack into
our system, so we can prevent hactors from hacking into
our system. So this is not going away. And and
and to me, Barry the single greatest risk in the
world today's terrorism. And terrorism can come at you a

(30:20):
number of different ways, not just by flying into a building.
But you know, they can have a bio you can
have a biological attack, and you can have a chemical attack.
You can have obviously a nuclear attacking, but you can
also have a cyber attack. And the cyber attack is
the one that probably scares me the most. Uh So
from the United States perspective in terms of just national defense,

(30:41):
we have to we have to make this a number
one priority in every business uh in our country and
probably around the world that has a serious technology uh
part of what they do, and I think that should
probably everybody. You've got to be able to protect that
and do everything. You can't stay ahead of the game.
And if you don't do that, you're gonna fall behind,
and you can't afford to fall behind. Let's talk a

(31:02):
little bit about your return to coaching. What made you
decide to go back into football. When I stepped down
to two thousand and eight as CEO, and that's one
of the firm asked me to be chairman. Um we
had had a return for our shareholders, and we outperformed
every financial phone and the globe ben and in two

(31:25):
thousand and eight when the world was bowling up, and
that includes the financial crushis but when the world was
bowling up, we got it right. We didn't do any
of the things everybody else then. And I said part
of that because, as I mentioned, I grew up in
the fixed income world and I pushed the envelope I'm
always pushing it. I'm very very aggressive, but never to
the point where you cross the line, and never to
the point where you cross the lines to aggressively i e.

(31:47):
With leverage, where you potentially put your institution at risk.
So we got it right. Uh So I sat down
two thousand and eight, and I had been working pretty
in my father's foot store since I was ten years old,
and I was ready. It was ready to try to
take a break. And um, but because we had done
so well. Um, Frankly, I had never been in more

(32:08):
demand in my career and there could have been some
very very significant opportunities, but I didn't step down to
take other opportunities. Um. And then I got a call
from a group of alumni at Yale telling me that
the football job may be opening. It wouldn't be interested,
And I remember literally I was in a hotel in Vermont,

(32:28):
and I remember looking at my telephone and a pretty
get back to my year and said, guys, I said,
you know, I have a coach for over twenty years,
and said, we know that, but we spent a lot
of time looking at the skill sets that required of
a head coach. We think you're not only had those
skill sets, but you have better advantage of the people
don't have. And I said, there's only one problem. What's that? Well,
I hard at thirt or five years of college football,
nothing like this has ever happened. And uh, somebody like

(32:52):
you is not going to be hired unless the assigned
off from the president. And the typical president in academia
may be very, very smart, but they're not risk takers.
They're not risk reward people. But think about think about it.
And I really did, and I really did, and I
spent the next six seven months to truly, truly, you know,
examining my conscious there's something that I wanted to do,
and uh, looking at the pros and the cons, and

(33:15):
it hit me that number one, at this point in
my life, while there are a lot of other things
I could do, what would I not get greatest? Would
I not get greater satisfaction by going back to football,
I'm really having an impact on helping Uh, six eighteen
and twenty two year old boy really kind of growing
up and becoming a man. And I didn't think I
could do anything else that would give me greatest satisfaction.

(33:37):
That number two, when I think this was subconscious, I
didn't acknowledge it out loud, but I do think it
was subconscious in hindsight that when I left football, uh,
to go to Wall Street when my career path was
was on a great path, when my career was on it,
when it was a great path, and um uh, I
think without question that I got on my ami. I think,

(33:58):
and I'm not done to Wall Street. I think I
would have been a major college coach at you know,
the biggest schools in the country. And I think I
would have been very successful doing that. And and and
and maybe there was a piece of me that, you know,
wanted to take a shot at that really interesting. So
before I asked you how being a football coach prepared
you for a career in finance, let me flip that question.

(34:20):
How did running a big technology and finance company prepare
you for your re entry into coaching? I think with
regard to I think, I think in the business world, uh,
we were always so aggressive and we're trying to This
is true. Also, the divisions are responsible for a Marl
Lynch so aggressive and trying trying to do as much
much as you can. To me, it wasn't so much

(34:42):
the bottom line. It was maximizing your potential. So if
you can earn a dollar and the street expect you
to earn a dollar, and you come into dollar Pen,
everybody's patting you on the back. But I would want
my executive team to know was the dollar pen the
most we could do or should we have done a
dollar twenty uh and and so maximize you pretend so
is football or business? What was always a priority of mine.

(35:03):
I certainly felt that showing in the business world. The
second piece of it that that in order to do that,
in order to have you know, thousands of people and
you know multiple things going on, you had to absolutely
make sure you had the right people around your period.
You had to make sure you the right people around
you that brought into what you believe in the people
that you count on a trust uh And you had
to be willing to make tough decisions if that wasn't

(35:25):
the case. I think you also then needed to be
able to definitely obviously delegate to those people. And again
I said before, you need to have a sophisticated enough
strategy to handle detension down the road, but simplify it
so you can execute every one of those things varied
were things that helped me become a better football coach.
So my number one priority was higher the best possible

(35:45):
people I can. They got to buy into my leadership philosophy,
got a buy into what I'm doing that they don't.
They're not going to be part of the program going forward.
And I am a world class delegator. And if you
are running my offense or you're running a defense or
whatever your particularly, I maybe I'm expecting you to do
that and I'll do what I can to help you.
Of course, during the game, certain decisions head coach gotta make,

(36:07):
but I am counting on you to be able to
do that very very similarly to what I did did
when I was on Wall Street. So so you have
you can't micromanage, and you've got to have the right
people in the place right that you delegate to. And
then the frankly, you monitor progress. So here's a question
that I guess is obvious, but I'm just thinking of

(36:28):
it now. There's a twenty year gap between your two
coaching stints. How has the game changed, How have the
student athletes changed, How has the technology and the officiating changed.
How different it's college football today from back when you
were a coach in the late seventies and eighties. So

(36:52):
first of all, you know, they simple thing that they
took the hashmah. They important to the middle a little bit,
so you have in effect on wider field number one.
Number of the game has certainly spent up. You know,
very few people even huddle up today. Now we did
that too, but that was that was a two minutes drill,
and we need to handle that bow offensively defensively. But
the only time people really did that was whether in

(37:12):
a two minutes drill. Now pretty much everybody does that. UM.
I think that when you look at sets that existed
there by by that I mean formations. UH typical offensive
is very much spread out across the field. That wasn't
always the case back then. So the games faster, there's more,
there was more uh combination, I think of passing and running,

(37:33):
probably more passing, UM and the and the speed of
the game. Now. I think today there's also more of
an emphasis placed on schemes, whereas when I coached first time,
he's probably more of an emphasis placed on fundamentals. So
I think were we both and fundamentals is one of
the things that I think we give us a competter advantage.
Now let's look at the player. So you've got you know,

(37:55):
you're eighteen year old kid, who's who's Who's constantly connected
because of technology, So there's more information coming at him
or her than has ever been the case in the past.
And I think because that tends to be a little
bit more pressure perhaps to produce or how you interact
with your peers or whatever it might be. But so

(38:15):
while the world has changed and everything is faster, and
everybody's connected, and everybody's got you know, look playing a
look at living at the phones all the time. The
basic thing that makes up the human being a young boy,
a young girl. Uh as you as you go through
the beginning of adulthood, that hasn't changed at all. It

(38:37):
hasn't changed at all. So I think about what it
was like when I was growing up, it was like
when my children growing up. I think what my players
were like the first time, and what players are like
this time. And the concerned about preer pressure, the concerned about,
you know, the issues associated with drugs or or sex
or alcohol, the pressure potentially that might come from a
parent or with the respective coaching, with respect of your teacher,

(38:59):
or with your girlfriend or boyfriend or whomever it might be,
that hasn't changed. So I think number one, you've got
to recognize that. And while the world's change around the
basic human being, what makes us pick, what makes us
stick inside? I think that was true fifty years ago
the rats today. I think it's gonna be true fifty

(39:19):
years from now. So there are two aspects to student
athletics that I think have changed, and I want to
get your opinion on the First is the athleticism of
the players. It certainly feels like players today are faster, bigger, stronger.
Is that my imagination or our student athletes really in

(39:44):
a level of competitive shape that's noticeably different than twenty
five years ago? Right, you see that exactly right? And
I think part of that is tremendous episodes, and of
course in terms of strength training and and and and
workouts and things like that at that frankly take place
over the span of the entire year. So if you
look at football, but this is true in other sports.

(40:06):
You know, our guys list at least twice a week,
and the off season that becomes three or four times
a week, perhaps five times a week, depending on what
we have going on. So in the fact you're working
out year round, that's number one. And the number two
pieces you know, after twenty five years to look at
mortality rates. You know, seventy five years ago, the TALI
rate may have been fifty. Today is eighty five. So
there's also the also the element of evolution that has

(40:29):
taken place, you know, the typical a little bit fast,
a little bit stronger, a little bit larger, a little
bit maybe a little bit smarter, all of those things
I think have taken place over time. And then the
second issue that came up over the past couple of
years is the concept of uh the n ci A
and student athletes demanding control over their image, control over um,

(40:54):
how how licensing is done with their names, and even
student athletes getting paid. What are your thoughts on this area? Well,
being a business guy, you know, Barry, I certainly I
think you've got to follow at the money and you've
got to pay close attention to that and um uh
so I think if you really understand money flow on
how it works a lot of times it's not that

(41:16):
you can not that your soothsayer or fortunate all, but
you kind of tell what's going to openly happen. And
with regards to this, to preface it for a moment,
when I went to college, I was married, I had
a daughter. At every gamemond education, and we have guys
so on the team only eighty five scholarships some means
a forty guy a team that that do not get aid,

(41:38):
and they treat exactly like the other guys, and they've
got to work just as hard as the other guys,
and they're not getting money. So you would think them
to be able to provide a student athlete with room board, books, tuition.
You know, it's a pretty significant thing. But the TV
contracts are so significant, are so significant today that the
amount of money of Power five school makes from or

(42:00):
a league from their conference, just in football alone is astronomical,
far greater than let's say what the entire athletic butget
would be at Coastal Carolina. So so, with that amount
of money, and look at coaches at the Par five
level getting paid four or five, six, seven, eight, nine
million dollars and the schools being able to get rid
of a coach and not have a problem with a
ten million dollar payout and hire another guy for six

(42:21):
seven million dollars. A year. There's a lot of money there,
and I would suggest that a lot of money is
actually being wasted. So for the student after you raised
the hand and say, hey, I'm a tied up with
some here. And I think the N double A could
have been could have taken a far greater leadership role
in this, but they didn't. And um uh so, so
it's at the end of the day, I think, I
think this is part of evolution, that we're moving in

(42:43):
this direction as student athletes. Uh. Now, I think the
majority of the states, I think have already voted that, uh,
you know, student athletes can get paid for the use
of their image. Uh. And I don't necessarily disagree with
any of that. So I think that's the way of
the world. Think that's the way the dolls are going.
Are there enough dollars go around so I can appreciate

(43:04):
that happen. So it's gonna happen. Take a leadership role
in it. Uh. The issue the concern that I have
is that this becomes easier to cheat. So we go
back in the seventies, the sixties and the seventies, wasn't
a comment to give give a player money. It wasn't common,
but you know you're doing that an effort to be
able to recruiter as certainly it happens in all sports,

(43:24):
but probably especially basketball where you really only need one
guy to really make a difference in the ultimate team.
So but then then you show what happened SMU, you
show it having a couple of other programs when when
when they got the death penalty. So the NT double
A and COUG football has really been very very strict
with that over time. Well, now, if individual players you

(43:45):
can get paid on their own because they're using their image,
or there's enough money to go around, and the student
athlete is getting some of that. Um, I worry about
how that gets controlled. I worry about I worry about
whether or not teams And there's so much money involved.
As I pointed out a minute ago, so much money involved,

(44:07):
there is even more of a propensity potentially to take
advantage that. By that, I mean crossing your line and cheating.
So I see, I see an uppick in that, which
is a negative. But moving this direction I think is
the way of the world. And I'd rather do with
it and have a control on it than than you know,
follow it along. Um. Since we're talking about getting paid

(44:28):
for UM playing, let's talk about getting paid for coaching.
I read something fascinating in USA today. UM as part
of the Coastal Carolina cutbacks, you agreed to forego your
salary and accept a dollar just as a formality, making

(44:49):
you arguably the best bargain in college athletics. How do
you respond to that? I think even with my salary,
I was a pretty good bargain for college athletics. But
I think at a dollar, at a dollar, that's a
deal with with my with a dollar, I think, especially
with my background and and why I take incredible, incredible

(45:09):
pride pride in being a football coause I'm not just
a football coach and UM with the university that I'm
associated with, you know, whatever I can do to kind
of participate in that or help, you know, I want
to be able to do so. So we were in
the middle of a global pandemical course and a lot
of people have sacrifice, and uh, you know, I thought
it was only fair that he gave up my salary,

(45:30):
and that also given your background in finance and management,
it really raises the question what do you do for
the college over and above? Just and I know it's
a full time job, but just being a coach. I
kind of picture you as being able to pick up
just about any sort of role and run again, not

(45:53):
to mix metaphors, but run with the ball on just
about anything you could possibly do for this cool well.
I think one of the things that you know, I
certainly had had a close it was Dave Descenzo, our
previous president who just stepped down recently. Um that you know,
he was the guy that, frankly, uh put his credibility
on the line by hiring me. So we always had

(46:14):
a good relationship, and he and I would be relatively
frequently and talk about different things he had going on.
I would always have to give him my opinion. Um
I was I was somewhat instrumental. And and uh the
current president that we had that they just officially began
in January, Uh, Michael Benson. And Uh. The guy has
an incredible academic resume. Frankly that the best of anybody

(46:37):
we have on campus. He's your true scholar. He speaks
multiple language, he plays multiple multiple instruments, but he's also
an athlete himself. Is children roughly, and he very much
understands and believes and appreciates the significant that athletics can
take uh in uh in a university life. So my
titles today have he stepped down in two thousand and eighteen.
My titles today are, I am executive advisor to the president,

(47:01):
and he and I probably try to have dinner every
couple of weeks to talk about what he's got going on.
And again, he's new, so he's making a lot of
changes and he all his decisions, but we'll talk about
a lot of that. And then, yes, I'm sure of athletics,
but the only thing, only responsibility I have in athletics
is football. So football does does report directly to me,
and so there there M there might two roles, but

(47:23):
I think uh President Benson especially will not hesitate to
use me in different roles for example, maybe visit the board,
talk about different things, etcetera. Uh So I'm happy for
them to to to leverage whatever my experiences may be.
Before we get to our favorite questions that we ask
all of our guests, I have a curveball I want
to throw at you, and it's this quote from Roger's

(47:47):
stare back, which is, it's unlikely that any other candidate
has ever been as remarkably successful in two unrelated fields
of endeavor, football and finance. As Joe is in so so,
tell us about your relationship with Roger Storeback, who, by
the way, for listeners who may not be familiar with

(48:09):
his history, not only was he a spectacular football player,
but he also built an amazing commercial real estate business
that was sold for I think half a billion dollars
like a giant winning transaction. Tell us a little bit
about your relationship with Roger Stoback, you know, to add

(48:29):
one point there that I think it's worth adding as well,
Barry that you know he also played at the Naval
Academy where he was hiding a trophy one. Then he
went on to serve our country as he graduate Naval Academy,
so he missed about four seasons or so as as
a pro football players still had and still had the
career he had. So when I decided that I want
to go back to football, I recognized that I wanted

(48:49):
to be able to reach out to as many people
as were practical that I thought maybe could give me
some insight. And one of those people was Roger now
one of my friends from all hot Uh former Admiral
of Bob Bell. He went to the Naval Academy around
around the same time that Roger did, and you know,
they were friends. So he made that introduction and I

(49:11):
went down to Dallas to meet with him, and he
became friends. Wasn't uncommon for us to have dinner, a
breakfast if I were in town, and he never hesitated,
you know, to to to talk to me if I
reached out for something. So so so that so that
ability for me to just have access to him by
itself was I think, really really terrific. And as you
pointed out, he's the one guy too that had not

(49:34):
as a coach. He was a player that there's a
difference there, but certainly understand the world of football, whether
it's collegiate or pro. And that certainly understand the world
of business because he was in credibly successful there as well.
So he was a very very bright guy, as you
would expect. So he was a wonderful resource for me,
for me to be able to reach out to really

(49:56):
really quite interesting. All right, So let's jump to our
favorite questions that we ask all our guests, starting with um,
given the fact that you're no longer coaching and have
a little more free time these days, tell us what
you're streaming? What are you what were you watching to
keep yourself busy? Uh? During the pandemic and and the

(50:17):
work from home year. Well, I think a lot of
people think, just because a football coach, I'm a crazy
football fan, but I'm not. And I look, you know,
I used to look at thirty five hours of tape
when I go home. I don't want to watch football.
So I would enjoy I would enjoy a movie. I
would enjoy some of the episodes that they had on Netflix.
I mean, whether it's uh Billions, Ray Donovan, uh, House

(50:40):
of Cards, uh, the uh Uh, they're a handful of
those that I think they're really really, really well done
that I enjoy because their episodes, you know, I'm not
stuck to two and a half hours having to watch
That's number one. The other thing that in terms of podcast,
the one that actually I do really enjoy is Compound

(51:01):
and that's the one you know with that Josh Brown runs,
and I think I follow that. I think they've done
a good job. And I think if I'm not if
I'm not mistaken, they're going to add a Compound and
friends things, which I don't think it's started yet, but
I've gotten a lot of value out of enjoyment out
of all those. So by the time this broadcast that

(51:21):
will have started. And uh, if you'd like to be
a guest on Compound and Friends, I would be happy
to twist Josh's arm and have you show up on
that podcast. I would enjoy that. Verry, I would enjoy that.
I have a lot of respect for him as well.
So now let's talk a little bit about some mentors.
Who were the people who helped shape your career. You know,

(51:43):
I think you could talk about you know, there are
as a coach, for example, I read everything that was
to read about Vince Lambardi and John Wooden because they
were both very successful but both are very very opposite.
In the business world, War and Buffy Got Lee, I Coco,
You've got you. There are so many people there, but
the people that really change shaped my career, uh, especially

(52:03):
as a leader and as as a person, but in
the in the in football and business. For my parents,
and my dad was an Italian immigrant. He came here
when he was eleven and never finished eighth grade. Uh
So bananas and apples and the bronchs entire life. But
dad that my mom he met my mom after World
War Two. She kicked in Ireland, she came over here

(52:25):
to marry it. Uh. She never finished tenth grade. I
was the oldest of five. The seven of us grew
up in At the time of that Instry section of
New York City was very much a gang area. I
was part of that and we lived seven of us
lived in the two bedroom in broom department. And from
my mom, she was had such an incredible attitude, always
with a smile on her face, unconditionally loved us, you know,

(52:48):
always had uh the glass was always half full, you know,
enjoyed lasting but truly truly loved us. And I think
very much I get my sense of humor and a
lot of my personality think from my mom. On my
dad's side, Dad was committed to make sure it's a
care of his family, who were very hard in that
food store with you know, was a verst to stays
a week and I learned, I learned the how how

(53:11):
important to real work ethic was. And again make sure
you think terry family. The difference with leard of my
dad and maybe three people working for him. And Dad
never had a hobby and most time he's burnt out
and later on in life he wanted to become an
alcoholic and uh, but I could tell just the way
he treated his guys and treated me. There was always
I felt kind of a better way to do something

(53:33):
like he was always in a bad mood. It was
never his fault. The glasses always half empty and um,
and I think he could have been a beat jobly
delegate and have the other guys who work. And in
terms of being a leader, and I mentioned before my
ability to delegate and how I run things and how
I lead, A lot of that that I learned was
from my father in terms of what not to do.
So I think the two greatest influencers on my life

(53:56):
were literally my MoMA, my mama my dad. Huh really
really quite interesting. Let's let's talk a little bit about books.
What are some of your favorites and what are you
reading currently? The the uh, probably my best most favorite
book is The Gold Coast, uh, probably written about thirty
years ago by Nelson the Mill, Uh about as the

(54:18):
Gold Coast meaning Long Island, and it's about the guy
I think he was, Stevie Bella Rosa, who was the
mafia guy that I think came in and buy one
of these estates on Long Island for making up the
numbers of like sixteen billion dollars and he brings it
back in cash to that and I thought it was
a fun book exactly, and I actually read it twice
because I enjoyed it that much. Then the other the
book book that I just finished, and I just thought

(54:39):
another one who was Walking with Ghosts by Gabriel Byrne,
and it's his memoirs and he's really a very very
very I've always respected him as an actor, but he's
really a very very clever writer, and I've gotten a
lot of joy out of that. And then when i'm
reading right now is Brock, you know, the one by Obama.

(55:00):
And this is a long one and I'm only about
a hundred thirty pages into it, but some of it
is really enjoyable. So I gets a little bit too
much detail. I skipped over a little bit, but that's
what I'm reading now, That's what I just finished. And
the other one my favorite book. So well, there are
a variety of different Barack Obama books. This is I'm
assuming is whatever the most recent one is. You know,
it's either Barack or it's Obama. It's just one word

(55:21):
title and it's his name. So our final two questions,
what sort of advice would you give to a recent
college grad who was interested in a career in either
college athletics or finance. Now, I think one of my
principles of leadership is uh I call spiritual soundence. It
doesn't have to be religious, but it can be. But

(55:42):
it's I think most people don't really know who they are,
and um, I think you become a compositive like who
I am relative to my mother, my father, my girlfriend,
my wife, my my job, what kind of executive am I?
What kind of coach and my what kind of friend
of my etcetera, etcetera. And if you sit down you
write that down. I just keep writing, writing, writing about yourself,
and you step away from and come back to it later.

(56:02):
You're probably gonna change things things you wrote down. But
the one guidelines you can never show it to anybody,
because the second you show to somebody, you sub constantly
actually looking at their approval. So in order to be happy,
I think you need to know who you are because
you're gonna have to make decisions under stress. And the
better you know who you are, the great the probability
you will make the right decisions. Now, one of those

(56:23):
and the most one of the most important by far,
is your career path. So, if you know who you are,
what kind of skill sets do you really have? What
are the skill sets required whether it's coaching or athletics
or business or whatever the field might be, what the
what the skill sets required for success in that field?
Do you have those skill sets? If you don't, do
not go down that path. If you do, you still

(56:43):
have to ask yourself one other thing, and that is
is this something you really love? The answers there is yes,
and chances are you've done a good job of picking
the right career path. So it's kind of irrelevant whether
it's finance or trading or investing or football. It's kind
of like what we're for you, not because this is
something you thought about, not because this is what your

(57:04):
dad did or somebody who admire does. Uh, it's kind
of what really works for you. And I think we
would have a happier society if more people spent more
time taking that through. To say the very least, and
our final question, what do you know about the world
of investing and trading and football today? That you wish

(57:26):
you knew years ago. I think I think thirty years ago.
From a football perspective, I think it would have been
great to have the scheme knowledge that exists today, the
ability really kind of go after, spread out the field,
take advantage not just the triple option that Oklahoma and
Nebraski used to run, but true option, attack, run, passed,

(57:46):
and do different things in effect. From an offensive perspective,
I think that would have been great. I think for
me to have back then and from from with regard
with regard to the business world, I think I think,
really the principles that I build on today, what are
your core competencies. You gotta make sure you take care
of your people. Uh, what really matters your clients, you shareholders,

(58:07):
and your associates. Because it's your employees. They give value
each of those constituents, you know. The For me, while
the world's changed, I just growing with the world. I've
just adapted. I do a good job of adapting, adjusting
and adapted just with the world. But the principles I
believe in so much today that I'm really good at
because of the experience that I've been able to late

(58:29):
That's kind of how I started out, and they were
the saying principles I believed in. You know, thirty years ago,
I wish I were more experienced, because with that experience
comes knowledge, and with that knowledge comes wisdom, so you
can make better decisions for yourself and for your people,
for your family. So UH be the same, so that
that would be what I wish I had thirty years ago.

(58:51):
Really quite quite fascinating. Joe, Thank you for being so
generous with your time. We have been speaking with Joe Mowglia,
who is not only formally a head coach at several
esteemed college football teams, but is also the former chairman
and CEO at trading giant T Dumeritrade. If you enjoy

(59:13):
this conversation, well check out any of the other nearly
four hundred such interviews we've had on Masters in Business.
You can find that at all the usual places, iTunes, Spotify,
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in suggestions right to us at m IB podcast at

(59:33):
Bloomberg dot net. Sign up for my daily reads at
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conversations together each week. Tim Harrow is my audio engineer,

(59:57):
Michael Batnick is my head of research. Atika val Brunn
is our project manager, and my producers are Michael Boyle
and Parris Wald. I'm Barrier Halts. You've been listening to
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