Morgan Stanley is buying discount broker E-Trade Financial for $13 billion, creating a firm that could have over $3 trillion in client assets.
The news comes three months after Charles Schwab said it was acquiring TD Ameritrade for $26 billion. That merger, now going through antitrust review, would potentially lead to a combined firm with $5 trillion in assets.
“E-Trade represents an extraordinary growth opportunity for our wealth-management business and a leap forward in our wealth-management strategy,” Morgan Stanley CEO James Gorman said in a statement.
If approved, the transaction would give Morgan Stanley both direct-to-consumer and digital capabilities to compete more aggressively with Merrill Edge and other mass-affluent offerings from rivals. Morgan Stanley’s 15,500 financial advisors focus more on high-net-worth and ultra-high net worth clients.
“This continues the decade-long transition of our firm to a more balance-sheet-light business mix, emphasizing more durable sources of revenue,” Gorman said.