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Wednesday, November 27, 2019

Schwab TD Ameritrade Merger is a disaster for individual investors.

The almost inevitable demise of TD Ameritrade

(see https://www.washingtonpost.com/business/2019/11/25/charles-schwab-will-acquire-td-ameritrade-creating-wealth-management-goliath-with-trillion-assets/)

is IMHO the demise of a great trading brokerage firm that exists for the benefit of small investors.

TDAmeritrade, a merger of TD Waterhouse, one of the few GREAT brokerage firms and Ameritrade, at that time a dubious day trader at best, ended up as another GREAT brokerage firm that offered outstanding and low-cost service to individual customers. It was not biased to large accounts which almost ALL brokers now are.

Individual investors are left with Vanguard and a few firms such as T. Rowe Price that still DO give smaller accounts the service they require. IMO, almost every other major firm rips off the small investor.

The only hope left, and it is a slim one at that, is for the merger to be blocked on anti-trust grounds. If the market is defined as the space of individual investors... it COULD be blocked. But, with zero commissions, it is unlikely.

Final note: suppose it is blocked and TDAmeritrade is a stand alone company, the zero-commission business model won't work anyway to the chagrin of small investors.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.