What about us? It’s the take from Boston-based financial behemoth Fidelity Investments, the nation’s largest recordkeeper, in the wake of the bombshell revelation that Schwab will acquire TD Ameritrade in a deal estimated at $26 billion.
Its view, not surprisingly, is that the merger will result in less value for customers and the potential for more service interruptions as “acquisitions of this size can be long, complex, and unsettling.”
“Unfortunately for investors, the combination of Charles Schwab and TD Ameritrade means they will likely be doubling down on revenue practices that directly disadvantage investors, including paying extremely low cash sweep rates and taking significant payment for order flow,” Kathy Murphy, president of Fidelity’s Personal Investing business, said in a statement Monday.
“While our public competitors are busy working on a massive integration of technologies and services, Fidelity will remain focused on investing in our platform and delivering an exceptional client experience, including unmatched value.”
Benefits outweighed
Murphy claimed these sweep rate and order flow practices could outweigh any benefit of zero online commissions.
“Fidelity is laser-focused on consistently delivering our customers the best value, choice, and service in the industry—something investors clearly expect and deserve,” She concluded. “We are confident there is no competitor that can match our value proposition while also making extensive investments back into the business.”
Fidelity sent the following stats to emphasize her points, noting that they make it “the undisputed scale leader, which enables us to bring more value to customers.”
As of Sept. 30, 2019:
- 72 million customer accounts, including 22 million retail accounts, nearly 10 million accounts through our institutional business, and roughly 40 million in our workplace investing business;
- $7.8 trillion in total customer assets, including managed assets of $2.8 trillion, and $2.36 trillion in retail brokerage assets
- Helping more than 30 million people invest; and
- Customers are opening nearly 10,000 new retail brokerage accounts each trading day.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
