Schwab confirms $26B broker deal

Mom and pop investors looking for a discount brokerage are likely to benefit in the long run from a Schwab-TD Ameritrade deal. Experts spoke with me about what a deal between two of the world’s biggest brokerage giants means for customers. #schwab #tdameritrade

Charles Schwab and TD Ameritrade announce historic $26 billion merger to create one of America's largest brokerage firms, with over $5 trillion in combined assets! What does it mean for the #wealthmanagement industry? Josh and Mike have thoughts!

Well, it's official. (Not surprised.) To save your valuable time here's some highlights (and lowlights) from the press release: The new SuperSchwab has aspirations of being "a challenger to the status quo." The irony here is that they ARE the status quo now. Megacorps don't challenge the status quo, they define it, but Schwab's PR team is working hard to craft a narrative here. The bulk of the release focuses on #Schwab and #TD's history as discount brokers and their services to investors. This is clearly the market share that drove the transaction. Schwab Advisor Services (their direct-to-consumer competitor to financial advisors) gets as much or more ink in Schwab's description as independent advisors do. Independent advisors are mentioned in both CEO quotes, a clear effort by the message team to say, "We still see you." Quite a bit of ink is spilt about scale and combining resources, which is how they are going to pay for zero trade fees in the long term. The core fantasy offered seems to be "no trade-offs" which is clearly not possible. Every decision has trade-offs, and every deal has winners and losers. I remain convinced that #advisors serving the mass market from the old TD are going to left behind here, but time will tell. #branding #marketing #strategy

Charles Schwab is paying 4.3x Sales multiple for TDAmeritrade based on last quarter revenues, but gaining 55%-65% more assets under management. It truly is a massive volume play....optimize the 'synergies' aka reduce your cost per trade, and work the few basis points, fractions of a penny, profit you make per trade from third parties like the market makers, the listing firms, etc... that pay you to access your volume. Additionally for active/guard/veterans, USAA sold their brokerage business to Charles Schwab back in August, so this may impact many of us as well.

When I asked last month what the race to zero commissions would mean for the brokerage industry, many of you said to expect consolidation. It’s here. Announced a few minutes ago, Charles Schwab has agreed to buy TD Ameritrade for $26 billion, creating a giant with $5 trillion in assets: https://lnkd.in/gVjXfpF. The deal is designed to diversify revenue streams and create scale that can combat margin pressure from lost commissions. Will it work? And what’s next? Shares of listed peers Interactive Brokers and E*TRADE have been mixed on the reports the past few trading days — do they or others like Fidelity Investments need an M&A strategy? What about Robinhood? The no-commission startup arguably was the impetus for others to cut straight to zero. If it can no longer compete on price, will its millennial appeal and focus on user experience maintain the growth it’s enjoyed to date? (Our deep dive from September: https://lnkd.in/gtVj5rc) Share your thoughts in the comments below. #LinkedInFinance

I am a fan of both of these companies and I used to work for one of them. I've been through two acquisitions and a merger of online brokers - here are the things that will take precedent over customer needs in the coming months: -Turf battles -Ascension of political operatives to positions of authority -Hemorrhaging of top talent in the get sh** done layer of management -Flood of PPT decks from overpaid, under-qualified consultants Some customers will leave - that's an opportunity for some of the newer, nimbler firms to step up and grow. #opportunityknocks

Say it isn't so, my beloved TD Ameritrade purchased by Charles Schwab? I am completely in shock at the likely change in culture from that we've enjoyed at TD Ameritrade, "we try harder" to Chas Schwab's "we're the biggest, get over yourself". UGH!! #tdameritrade #charlesschwab