According to CNBC, who first reported on the potential deal, this follows plans by all the major brokerages to go to zero commission fees. The financial news website writes that Charles Schwab was the first to make this move in early October, with TD Ameritrade following. The move is great for customers, but it also means that brokers are looking for other ways to make profits.
Charles Schwab is reported to be the biggest online brokerage, according to the Financial Times, with over 10 million active accounts. TD Ameritrade provides investing and trading services for 11 million client accounts, according to its website.
How Will This Potential Merger Affect Your Brokerage Account?
Whether a company merges or acquires another, there will always be changes for the consumer. However, what does this merger mean for current and future customers of these two brokers?
Anthony Denier, CEO of Webull, a commission-free trading platform, believes that consolidation has been coming since the slash of commissions: “Since online brokers slashed commissions to zero in early October the industry has been bracing for news of consolidation.
“ETrade was the expected first casualty, so yesterday’s news of Schwab in talks to buy TD was an unexpected result of an anticipated industry tightening,” he continues. “It is yet unknown exactly how TD account holders will be affected, but for sure they will be offered Schwab investment products very quickly.
“In my opinion, less choices on where to invest will bring about a rising tide of smaller and more niche brokers to cater to the investors who don’t believe one size fits all,” he told Newsweek.
Already having large shares of the market, this merger would mean both brokers would gain market share. This, in turn, could hike prices for customers on their accounts or could mean some other brokerages reverting on providing zero commissioning fees.
For any potential customers affected, following these tips might put minds at ease:
Learn about the other company involved; what does Charles Schwab offer that TD Ameritrade doesn’t, or does TD Ameritrade have more competitive offerings?The other thing to read up on is fees; are there any additional fees the other company charges? Knowing these things in advance can help prepare if rumors are confirmed. If a merger does go through between the two brokerages, then keeping an eye on paper and email correspondence will be important. Not only for any announcements or incoming changes but also in case of email phishing campaigns. If it turns out you will be charged more or they’ll be additions made to your service that you don’t want, talk to your brokerage and try to negotiate. Brokers are all about the service they provide to customers and most likely will not want loyal customers to leave them. Following all of this, if customers want to move their brokerage account then the best thing to do is shop around. Each person will have their own investment style and preference so researching and meeting other brokerages will help with making the right decision.
Newsweek has contacted Charles Schwab and TD Ameritrade for comment on the rumors of a merger.
