Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



There Goes Another One

Don't rent a tuxedo or a bridal party gown. Buy one. That's probably the best way to make sure that you will be ready for the next round of discount-brokerage nuptials. Yesterday it was E*Trade (NYSE: ET  ) announcing that it will acquire BrownCo in a $1.6 billion deal.

It's a great catch for E*Trade. The deal will add only 200,000 accounts to E*Trade's base of more than 4 million, but these are also choice customers. The average BrownCo account consists of better than $145,000 in assets. BrownCo customers are a leveraged lot as well, taking advantage of $3 billion in margin account balances. That nearly matches the $3.2 billion in margin balances at E*Trade after it completes its $700 million acquisition of Harrisdirect later this year. BrownCo customers are also quite active, averaging a revenue trade every seven days. In comparison, it's roughly a month between trades for E*Trade's current accounts. That's why E*Trade is willing to pay more than twice as much for BrownCo than it did for Harrisdirect, despite Harrisdirect's bringing 420,000 accounts to the union.

A smooth integration will be critical, since BrownCo customers will be keeping an eye out for any revised commission schedules or changes in trade executions. It's in E*Trade's best interest to disrupt the account holders as little as possible, as it gradually markets its assortment of financial services.

That's how it's been in the trade trade lately. Ameritrade (Nasdaq: AMTD  ) beat out E*Trade to land Toronto Dominion's (NYSE: TD  ) TD Waterhouse division over the summer. Charles Schwab (NYSE: SCH  ) hasn't been as acquisitive, though it has lowered rates to remain competitive.

When will the consolidation end? Will we come to the sad day when the broker comparison table in our Discount Broker Center runs just one column long? Don't bet on it. However, until told otherwise, you'd better get that wedding wear back from the cleaners before the next set of discounters partners up.

Charles Schwab is aMotley Fool Stock Advisorrecommendation.

Longtime Fool contributor Rick Munarriz has been trading exclusively through discount brokers since 1990, but he does not own shares in any of the companies in this story. The Fool has adisclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 496699, ~/Articles/ArticleHandler.aspx, 9/27/2016 4:40:25 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
AMTD $32.58 Up +0.03 +0.09%
TD Ameritrade CAPS Rating: *****
TD $43.89 Up +0.16 +0.37%
The Toronto-Domini… CAPS Rating: ****