TD Ameritrade Holding Corp. has 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 the end of the year, 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. TD Ameritrade was formed through the acquisition of TD Waterhouse USA by Ameritrade in 2005; it custodies assets for some 4,000 RIAs. When the deal closes, it should place Waterhouse back in a solid third place among custodians of RIAs as measured by assets, behind Schwab and Fidelity and ahead of a fast-growing Pershing Advisor Solutions.
Skip Schweiss, the long-time Fiserv executive who oversess 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.”