TD Ameritrade Acquisition By Charles Schwab Causes Concern for Active Customers

Sophisticated stock traders have gravitated towards TD Ameritrade over the years.

For over a decade, TD Ameritrade has had the best trading platform in the online trading business, and with the Sink or Swim acquisition they also have a great options business.

TD Ameritrade’s fees have not been the lowest, but TD Ameritrade was always competitive and was the first to match Schwab’s move to zero.

Most importantly, TD Ameritrade has always treated its active customers with respect.   This has manifested itself in two ways.

First, TD Ameritrade never tried to sneak in hidden fees.   Many online brokers routinely try to sneak in “ADR fees”, “reorganization fees”, inactivity fees and all sorts of transfer fees.   At some point early in the game, TD Ameritrade got the message that their customers would tolerate this, and for at least the last decade or so it has not played that game.

Second, TD Ameritrade has always been very generous to its customers with retention and now money bonuses.   For years, TD Ameritrade handed out United, Delta and American Airlines miles generously for small cash transfers in.   More recently, customers with even small balances can expect to receive hundreds of dollars each year just by asking for a retention bonus.   And, even over the last several weeks, TD Ameritrade has been offering huge bonuses to customers bringing new money to the bank (paying as much as $6,000 for a $2,000,000 transfers in).

Now, along comes Schwab, a company that has for decades targeted inexperienced and unsophisticated investors with products that generated high fees for the bank.

It is unclear where this goes for those who have developed loyalty to TD Ameritrade and enjoyed its service over the years, but on its face this looks a lot like the Marriott – Starwood acquisition.