From the July 2007 issue of Investment Advisor • Subscribe!

July 1, 2007

TD Ameritrade to Acquire Fiserv's Advisor Unit

Price is $225 million in cash, plus earn out

On May 24, TD Ameritrade said it had signed an agreement to acquire Fiserv Inc.'s Fiserv Investment Support Services (ISS) operation, which Fiserv says manages 300,000 retirement, trust, and custodial accounts valued at $46 billion. Under the complicated deal that will break up Fiserv ISS, TD Ameritrade will pay $225 million in cash for the operation at closing, which is expected to occur by year end, along with an additional $100 million payment contingent on the business achieving certain revenue targets over the twelve months after closing.

Denver-based Fiserv ISS, the former DATALynx, custodies client assets for some 400 fee-based advisors through its Advisor Services unit, and has gained a reputation over the years for the quality of its support and service staff, though some observers, and advisors, have noted that Fiserv struggled to compete with the larger custodians of RIA assets in technology and breadth of product offerings.

TD Ameritrade was formed through the acquisition of TD Waterhouse USA by Ameritrade in 2005; it custodies assets for some 4,000 RIAs through its TD Ameritrade Institutional unit. When the deal closes, it should place TD Ameritrade back in a solid third place among custodians of RIAs as measured by assets, behind Schwab and Fidelity and ahead of a fast-growing competitor, Pershing Advisor Solutions.

Tom Bradley, president of TD Ameritrade Institutional, said "This deal will have no effect on the advisors who currently custody with us, but it will make TD Ameritrade a much stronger company over all."

Skip Schweiss, the long-time Fiserv executive who oversees Fiserv ISS, said in a statement that "We looked hard to find the right partner for our institutional clients, and TD Ameritrade offered a great fit," going on to say TD Ameritrade shared Fiserv's "commitment to exceptional service," and noted its "emerging strength in the open architecture defined contribution market space."

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