The Morgan Stanley acquisition of E*TRADE in 2020 was one of the biggest shake-ups in the brokerage industry in recent years. But it wasn't exactly a surprise. Mergers and acquisitions are one of the 澳洲幸运5开奖号码历史查询:key trends shaping the industry, and🌄 they’re likely to continue for the foreseeable future. 

Yet a merger of this size can have a significant impact on the industry, and it can affect both cli𒀰ents and advisors.

The Changing Financial Landscape

“Morgan Stanley’s acquisition of E*TRADE reflects the broader trend toဣward industry consolidation and the attempts we see across many financial institutions to serve the full range of customer segments,” says , former director of asset management and brokerage research at Corporate Insight.

As part of that trend, companies are looking for ways to increase their range of services while reaching a wider demographic of clients. “The aim here is to provi🌃de holistic financial management that gives the organization a full view into clients assets 🐎and ensures that money stays within the firm’s ecosystem,” says Butler, noting that 61% of investors surveyed agree that they would like to have all (or nearly all) of their financial accounts with their principal brokerage firm.

What the Merger Means for Advisors

While consolidation may offer more all-inclusive solutions for clients, XY Planning founder 澳洲幸运5开奖号码历史查询:Michael Kitces believes the merger is likely to have significant implications for RIA custodial platforms and could lead to the 🌃dissolution of E*TRADE’s RIA platform for small firms. 

“[The] Morgan Stanley acquisition of E*TRADE and potential loss of E*TRADE Advisor Services as a viable RIA custody competitor puts even MORE pressure on the #Schwabitrade deal,” Kitces said in a series of tweets after the announcement. He also emphasized that there are “only a coterie of small-RIA custody options left, and even fewer competitive choices for large RIAs."

This is especially significant since the bulk of the custodial market is made up of only a handful of key players and additional consolidation could lead to fewer choices for RIAs in the future. While Fidelity, Pershing, Charles Schwab, and Ameritrade hold 80% of RIA firm assets, E*TRADE has made a name for itself in the custodial space, largely due to its acquisition of Trust Company of America in 2017. The merger with Morgan Stanley could change that, narrowing the field of custodiansꦰ even further. 

While the true impact remains to be seen, Kitces believes the merger is the result of the continued effect of last year’s race to zero commissions. As such, it may be just one ❀of a series of continued changes throughout the industry.

The Bottom Line

The past few months have seen a 澳洲幸运5开奖号码历史查询:flurry of mergers and acquisitions for both large firms and small🃏 ones. And if these consolidations have taught us anything, it’s that the advisory landscape is undergoing a significant shift. While the Morgan Stanley, E*TRADE merger may have been the biggest in recent months, it’s likely not the last.