Category Archives: investing

Possible changes to Scottrade after the merger to TD Ameritrade

A month ago TD Ameritrade and Scottrade agreed to merge for $4 billion. In this merger TD Ameritrade will be buying Scottrade, and they expect to see $450 million in benefit by merging.  That $450 million will be realized through cost cutting and revenue growth.

What could this mean for you, if you have a Scottrade account?

TD Ameritrade generally has higher rates than Scottrade by as much as 43% (see below for transaction pricing differences).   Most likely after the merger Scottrade’s pricing will be increased to match TD Ameritrade.  This means that those price increases will be passed on to you to help the company “earn” the benefit from merging.  In addition, if there are TD Ameritrade branches that are nearby Scottrade branches, the merged company will most likely close one of those branches.  Read through the comparison of pricing to see if the cost differences could impact you.  If the differences are substantial for the types of trades that you do, you may want to consider moving your accounts to other brokerages.

Scottrade Pricing vs TD Ameritrade Pricing

Scottrade and TD Ameritrade do not charge inactivity fees or minimum monthly transaction fees.  So at minimum after the merger, nothing should change there.

Stocks and ETF Trades

Scottrade TD Ameritrade Difference
Online $7 $9.99 +43%
Broker $32 $44.99 +41%
Phone (IVR) $32 $34.99 +9%

One benefit that TD Ameritrade has is that they offer a wide array of around 100 ETF’s that you can trade for free.  Scottrade used to have a handful of no trading fee ETF’s but that program was discontinued.

Mutual Funds

Scottrade TD Ameritrade Difference
No Load, No Transaction Fee (NTF) $0 $0 0%
No Load $17 to sell $49.99 to sell 194%
Load $32 to sell $0 to sell -100%

 

Options and Contracts

Scottrade TD Ameritrade Difference
Online $7 + $0.70 per contract $9.99 + $0.70 per contract +43%
Broker $32 + $0.70 per contract $44.99 + $0.70 per contract +41%
Phone (IVR) $32 + $0.70 per contract $34.99 + $0.70 per contract +9%
Option Exercises Assignments $17 $19.99 +18%

 

The merger has not yet been approved by the FTC, but is it likely to be approved as there are other competing brokerages that would be larger than the combined company.