Online broker prepares for a bigger retail presence, broader RIA platform. Ameritrade and TD Waterhouse are gearing up for their merger by lining up an executive team for TD Ameritrade. Ameritrade says it’s eager to have a team in place to oversee its transition from “a marketing to a marketing and sales-driven organization” – that is, from a more or less pure-play online brokerage to a company with a bigger retail presence and a more comprehensive service platform for registered investment advisors (RIAs).

At last count TD Waterhouse had about 140 branch offices in the U.S. as against Ameritrade’s four. TD Waterhouse was custodian to about $42 billion in end-client assets last spring; Ameritrade was custodian to about $4 billion RIA-advised assets.

The merger agreement combines Ameritrade’s and TD Waterhouse’s U.S. operations and gives Toronto-Dominion Bank, TD Waterhouse’s Canadian parent, a 32% stake in the combined company – which it can increase to 45% after four years. The family of Ameritrade founder Joe Ricketss agreed to cap its ownership at 29%. The companies expect to close the deal within a few months.

Evolutionaries

Ameritrade CEO Joe Moglia will be chief executive of TD Ameritrade, as announced when the merger agreement came to light last June. The Omaha, Neb.-based discount broker’s CFO Randy MacDonald and COO Asiff Hirji will keep those titles after the merger and they’ll continue to advise Moglia in an “advisory and strategic capacity,” according to an Ameritrade press release.

TD Waterhouse’s acting CEO Chris Armstrong will head TD Ameritrade’s sales and marketing efforts as an executive v.p. and “lead the evolution of the combined company into a sales and marketing organization, including a comprehensive branch network and registered investment advisor business.”

Ameritrade’s Laurine Garrity, a v.p. in charge of marketing-program development, will report to Armstrong as chief marketing officer for the combined company. Ameritrade’s chief marketing officer Anne Nelson will stay on after the merger “in an advisory and consulting capacity.”

Ameritrade executive Larry Szczech will oversee client segmentation initiatives and “the delivery of client-driven products and services aimed to provide a superior, value-priced client experience.” He’ll report to Moglia.

As an RIA service agent, New York-based TD Waterhouse runs a distant third to Schwab Institutional, which was custodian to $365 billion in end-client assets at the end of June, Fidelity Investments Registered Investment Advisor, which was custodian to $137 billion at the end of July.

The merger of Ameritrade and TD Waterhouse is part of a consolidation trend in the brokerage space as players react to dwindling demand and declining commission fees. Recent months have seen a number of similar deals, including Smith Barney’s takeover of Legg Mason’s broker-dealer, E-Trade’s acquisitions of Harrisdirect and BrownCo, and Merrill Lynch’s purchase of Advest. –FWR

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