TD Ameritrade and TD Bank Acquire Scottrade Financial for $4 Billion
Well, here’s a financial plot twist that could spice up even the sleepiest boardroom: TD Ameritrade, with a little (okay, major) help from its heavyweight buddy TD Bank, has decided to snap up Scottrade Financial in a juicy $4 billion deal. Not exactly pocket change, right? The news broke via a TD press release (source), and if you follow finance headlines like some people follow celebrity gossip, you’ll know Reuters has already pegged the closing for September 30, 2017 (source).
How the Deal Is Going Down
Let’s rewind for a sec. Before snazzy robo-advisors like Wealthfront or Betterment made every millennial feel like Warren Buffett, it was the plain ol’ discount brokers who flipped the game. Suddenly, regular folks (read: you and me) could buy and sell stocks online without paying an arm and a leg in fees—hallelujah, am I right? Now, in this two-stage mega deal, TD Bank gets Scottrade Bank by shelling out $1.3 billion. Meanwhile, TD Ameritrade picks up the brokerage side of the house, Scottrade Financial Services, coughing up about $2.7 billion for the privilege.
Why Now? It’s All About Going With the (Passive) Flow
Honestly, the timing seems spot-on. Let’s face it: active trading is starting to feel passé, like using MySpace or paying for cable. According to Money (source), the cool kids (that’s us, retail investors) are veering away from frantic trading and leaning hard into passive investing options. We’re talking index funds and ETFs—those “set it and forget it” style investments. In just the past three years, over $1 trillion has poured into these vehicles, while active mutual funds watch their assets do the financial equivalent of melting ice cream on a summer sidewalk.
The Numbers Game: Just How Big Did These Guys Get?
Alright, time for the stats that’ll impress even your most skeptical finance friend. In the twelve months ending September 30, 2016, this soon-to-be supergroup averaged 600,000 trades every single day—I mean, try wrapping your head around that click frenzy! And if you stacked all the assets managed by both companies, you’d reach a wallet-bursting $944 billion. Talk about moving up to the financial big leagues.
What’s Next for Investors?
So, what does this power move mean for the rest of us just trying to get a decent return for our rainy-day fund? For one thing, with even fewer major brokerages, your choices might shrink a bit (hey, it’s not all roses). Still, with bigger players comes bigger technology, improved platforms, and possibly—just possibly—better deals for us mere mortals. But only time (and maybe your brokerage statements) will tell.