Scottrade advisers test custodial waters

Some could choose not to follow company to TD Ameritrade when acquisition hits in September

Aug 7, 2017 @ 11:20 am

By Jeff Benjamin

As TD Ameritrade Holding Corp. closes in on its September acquisition of Scottrade Financial Services, some competitor custodians have been quietly watching, waiting and rolling out the red carpet to Scottrade advisers who might choose to leave in the wake of the $4 billion deal.

"I would imagine there are differences between the two models, and that will create some friction and some opportunities for other custodians," said Alois Pirker, research director at Aite Group.

TD Ameritrade Institutional — one of the big four custodians, along with Fidelity Clearing and Custody Solutions, Schwab Advisor Services and Pershing Advisor Solutions — shares a piece of an estimated $2.5 trillion in custody assets among the biggest players.

(More: Custodians are charting fintech's future)

TD does not make public its assets under custody, but reports 5,000 registered investment adviser clients.

Scottrade Advisor Services, by contrast, is among the second-tier players that have competed by often catering to smaller and state-registered advisers. It has $10 billion in custody and 800 RIA clients.

"TD has grown tremendously, and I'm sure they have found some sweet spots, and if you don't fit into that bucket you look for alternatives," Mr. Pirker said. "But anybody now custodying at Scottrade will have to shift to the new platform, and if you have to migrate anyway, you might decide to look around."

Some other custodians say they have indeed received questions from Scottrade advisers about their services.

"The inquiries started back in October when the deal was first announced, but as it gets closer, the interest is picking up steam," said Dan Skiles, president of Shareholders Service Group, a custodian that works with about 1,500 RIA advisers.

Robb Baldwin, chief executive of TradePMR, a custodian with about 730 RIA clients, said his firm has gotten inquiries from a handful of Scottrade advisers each month.

"We are very cognizant of the fact there will be a number of advisers in transition," he said.

But Daniel Seivert, chief executive and managing partner at Echelon Partners, said the benefit of the acquisition for RIAs currently working with TD and anyone coming over from Scottrade will be "more branch referrals."

"Definitely some upside for those RIAs," he said.

Mr. Pirker also noted TD's ability to "use technology smartly" as something that will likely appeal to Scottrade RIAs.


In early July, during TD's quarterly earnings call with industry analysts, chief executive Tim Hockey said the Scottrade deal was moving forward toward a third-quarter completion.

According to company spokesman Joseph Giannone, "Integration and planning is ongoing, and there are many things we can't do or say until we've officially closed the transaction. What I can tell you is that we are focused on managing talent and leveraging strengths."

Regarding the "RIA side of the business, we expect it to be business as usual for advisers on our platform," Mr. Giannone said. "The Scottrade transaction is unlikely to impact our RIA platform, our accounts or our service levels, because the merger is largely focused on retail client accounts and branches. We fully expect Scottrade's [RIA] clients will be pleased to join TD Ameritrade."

Scottrade spokesperson Whitney Ellis was vague about life after the transaction for its advisers.

"At this point, TD Ameritrade and Scottrade are still two separate companies, and Scottrade Advisor Services continues to support 800 advisers that use us as a custodian," she said, adding that the deal is "still on a path for a close by September."

And other custodians will have their own metrics to meet for any Scottrade advisers who wish to join them instead of moving to TD.

"We handle those on a case by case basis to make sure they're a good fit for us," said Mr. Baldwin of TradePMR. "We want to make sure they fit our culture, they have a good track record, clean regulatory history and want to grow their business."


What do you think?

View comments

Recommended for you

Upcoming Event

May 02


Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


The biggest obstacles young baby boomers face in retirement

Deputy editor Bob Hordt and senior columnist John Waggoner discuss how pensions, college expense and aging parents are uniquely challenging for younger baby boomers as they prepare for retirement.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Why private equity wants a piece of the RIA market

Several factors, including consolidation in the independent advice industry and PE's own growing mountain of cash, are fueling the zeal to invest.

Finra bars former UBS rep for private securities transactions

Regulator says Kenneth Tyrrell engaged in undisclosed trades worth $13 million.

Stripped of fat commissions, nontraded REIT sales tank

The "income, diversify and interest rate" pitch was never the main draw for brokers.

Morgan Stanley fires former Congressman Harold Ford for misconduct

Allegations against the wirehouse's former managing director include sexual harassment, which Ford denies.

Senate tax bill changes for pass-throughs more generous than House version, experts say

Senate measure's handling of such small-business income is simpler and makes allowances for more service companies.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print