Scottrade Financial Services Inc., the online brokerage, is working with an adviser to explore a sale, according to Bloomberg News.
A deal could value Town & Country, Missouri-based Scottrade at about $4 billion, according to Bloomberg, citing people familiar with the matter who asked not to be identified because the matter isn't public. The company has drawn interest from rivals including
TD Ameritrade Holding Corp., they said.
If Scottrade is on the block, as
reported late Wednesday, that means 1,000 registered investment advisers in the future could have a new corporate home.
Those are the number of RIAs that custody with Scottrade Advisor Services, according to the most recent
survey from
InvestmentNews.
There was no guarantee that any deal will be struck, according to the people cited in the report.
Scottrade, an online retail brokerage that also has a sizeable RIA custody business, has drawn interest from rivals including
TD Ameritrade Holding Corp., according to the report.
TD Ameritrade Institutional has 5,000 RIA custody clients, according to
InvestmentNews data. Neither Scottrade nor TD Ameritrade reported the amount of client assets their advisers manage.
Brian Stimpfl, a senior vice president who runs the adviser services group at Scottrade, knows TD Ameritrade well; he worked there for 17 years and was a managing director when he left in 2010. He joined Scottrade
as head of adviser services in 2014.
Whitney Ellis, a spokesman for Scottrade, did not return calls seeking comment. Joseph Giannone, a spokesman for TD Ameritrade, also did not return calls.
SLUGGISH GROWTH
The timing of any potential Scottrade sale was a question for one analyst.
In a report Thursday morning, Steven Chubak, an analyst with Nomura Securities International Inc., wrote: The news of a potential sale of Scottrade “does not come as a total shock as Scottrade's CEO Rodger Riney was unfortunately diagnosed with multiple myeloma late last year, which initially gave rise to talk of a potential sale. However, the initial reports suggested that Mr. Riney intended to 'be involved in running the firm throughout this process' suggested that a sale was not imminent.”
Scottrade and TD are two of the largest online brokers, platforms used by consumers, wealth advisers and other investors to trade securities outside of traditional brokerages.
The online brokerage industry has been dealing with lower trading volumes and sluggish revenue growth, as rivals slash fees to steal business, according to David Ritter, an analyst with Bloomberg Intelligence. Buying Scottrade could enable TD Ameritrade to reduce costs by eliminating redundant back-office systems, while bringing in new customers, he said.
“This is a way of acquiring the accounts, and the assets that come with it, in one fell swoop,” Mr. Ritter said.
Scottrade Financial provides a broad range of retail brokerage, investment advisory, and banking services through four different subsidiaries. Its best-known business is Scottrade Inc., among the first so-called discount brokerages, with about 500 branches around the U.S.
With additional reporting from Bloomberg News.
