E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.
OCT 19, 2017

E*Trade said Thursday it is buying Trust Company of America for $275 million in cash. Josh Pace, president and chief executive of Trust Company of America, said in a letter to the firm's investment-adviser clients that the transaction will close by the end of the second quarter of 2018. "E*Trade brings a lot to the table," Mr. Pace wrote. "We believe the resources and depth of this industry-leading organziation will aid our continued growth, innovative technology, and the world-class service you and your clients have come to expect." Established in 1990, TCA is an independent custodian with $17 billion in assets that provides technology and custody services for about 180 registered investment advisers on its platform. It has carved out a niche among RIAs while competing against larger custodians, such as Schwab, Fidelity and TD Ameritrade. In his letter, Mr. Pace said that the he will continue to head TCA and that its "service model...[and] fee structure will not change." E*Trade will bolster TCA's technology offerings, he said. "This new chapter of our company will be filled with many opportunities to enhance our technology and grow our company, while maintaining our values and company culture," Mr. Pace wrote. The purchase of TCA will help E*Trade strengthen its position in the investment-advice sector, said E*Trade chief executive Karl Roessner. "Their superior technology solutions in the RIA space are a natural complement to the cutting edge digital experiences we offer to retail investors," Mr. Roessner said in an earnings statement on Thursday. "Beyond the ability to offer enhanced services to certain segments of our client base, we are confident that the extension of the E*TRADE brand will provide the TCA team with some additional firepower to accelerate growth."

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