Schwab Officially Strikes Deal to Buy TD Ameritrade

Toronto-Dominion Bank, which now owns some 43% of TD Ameritrade common stock, is expected to own roughly 13% of the new company; its voting stake will be capped at 9.9%. Other TD Ameritrade stockholders and current Schwab shareholders should then own about 18% and 69%, respectively. 

Once approved — the deal faces antitrust and other hurdles — the new entity aims to "capitalize on the unique opportunity to build a firm with the soul of a challenger and the resources of a large financial services institution," Schwab President and CEO Walt Bettinger said in a statement on Monday. 

As for RIAs, "I see two camps forming," said Gavin Spitzner, president of Wealth Consulting Partners. "One, for those now with TD Ameritrade expressly not to be with Schwab, will use this as a reason to migrate away to an established firm or potentially an upstart like Altruist."

The second camp could see the combination as having extra resources to invest in innovation and "doesn't care about the competitive angle of their custodian competing alongside them in the wealth business and might grumble but will stay," Spitzner explained. "Most interesting will be the ripple effects and who acquires or merges with who coming out of this."

As to how the deal came to be — following on the heels of Schwab's and TD Ameritrade's move to zero commissions on trades — George Papadopoulas, an RIA, said on Twitter: "Lets face it, Schwab is a hell of a competitor! They managed to flat out corner TD Ameritrade whose executive team could not manage to transition the company away from relying so much on trading commissions. And then they went for the kill!"

– See Schwab-TD Ameritrade Deal Is No Sure Thing on ThinkAdvisor; and Why Schwab-TD Deal Is All About Assets First, Advisors Second