TD Ameritrade Buy-Out: Part 2

By Gary Silverman, CFP®

Last week I began a discussion about the upcoming purchase of the very large discount brokerage firm, TD Ameritrade, by the even bigger firm, Charles Schwab. Most of the article was backstory about how I was dissed by Schwab in my firm’s early days and how I ended up using the tiny discount brokerage firm of Jack White and Company (JW&C) for my clients’ accounts. The story continues…

For over five years things went swimmingly. My firm grew. For the last couple of those years I would get regular phone calls from a firm called Waterhouse. They wanted me to move my clients’ accounts over to them. I told them each time that JW&C was an excellent broker, so I had no need to switch.

Apparently, they heard that a lot, so in 1998 they convinced Jack to sell his company to them. $110 million helped. The only real difference visible to my clients was that statements were stamped with “Waterhouse.”  For a while everything was fine. But that’s the way with mergers and acquisitions. The acquiring firm has a lot of stuff to do with legal and accounting issues and needs time to get a feel for the new entity in its fold.

I think it was about a year or two later that Waterhouse began merging systems that were working well into their systems that weren’t. They began replacing the old JW&C managers with their own. Service suffered. A lot. It was not fun, though we were able to shield our clients from the worst of it.

(This isn’t unique to this particular buy-out. I had careers in industries prior to my financial one and had experienced this before. The scenarios and results were about the same.)

Eventually things smoothed out with impetus created by the chorus of complaints (and many defections) of the advisory groups they inherited. Waterhouse got renamed TD Waterhouse. Another six years or so passed without any major hiccups.

Then in 2006, Ameritrade acquired TD Waterhouse to become TD Ameritrade (or, if you listen to the old Waterhouse folks, it was Ameritrade who got acquired).

I think it was about a year or two later that TD Ameritrade began merging Waterhouse systems that were working well into their systems that weren’t. Service suffered. A lot. It was not fun, though we were able to shield our clients from the worst of it. Sound familiar?

Eventually, things returned to normal and for the next decade things went swimmingly. Now Schwab, the folks who didn’t want to talk to me when I was starting, are buying out TD Ameritrade. And while I am still a little bitter after more than a quarter century (I’m not a perfect man), I don’t think this will be any worse than the other acquisitions I’ve had to live through. Been there, done that.

Next week we’ll look at why TD Ameritrade sold out to Schwab and what it means to you...even if you don't do business with either.

Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing (available at amazon.com).