Sale of the E * Trade RIA custody activity to an online bank

Axos Financial, a San Diego, Calif., Based banking holding company, is buying E * Trade’s RIA custody business from Morgan Stanley for $ 55 million in cash.

The transaction is expected to close in the third quarter of 2021. Axos will eventually provide custody of approximately $ 23 billion in assets managed by 200 different RIAs.

Charles Schwab, the conservation industry’s biggest hitter, had around $ 3.2 billion in assets in his Schwab Advisor Services division at the end of the first quarter of 2021.

“The addition of approximately 200 RIA custodial relationships with $ 23 billion in combined assets in custody significantly accelerates our time to scale in this business,” said Greg Garrabrants, CEO of Axos Financial.

The deal is structured so that Axos Clearing, Axos Financial’s existing RIA custodian and leading broker-dealer, acquires “certain assets and liabilities related to E * Trade Advisor Services”. Axos will also add Liberty, E * Trade’s end-to-end RIA technology platform, which includes performance reporting and trading tools.

“The RIA custody business is an integral part of our strategic plan, and the addition of a team of experts with decades of experience and relationships with the RIA community is something we greatly appreciate,” said Garrabrants. “We look forward to investing in and expanding the E * Trade Advisor Services team to support its contact-intensive service model. “

Other companies under the Axos Financial umbrella include Axos Bank – a bank with around $ 14.4 billion in assets – and Axos Invest, a robo-advisor. The company’s bank specializes in online loans and has no branches.

Morgan Stanley acquired E * Trade in October 2020 in an all-equity deal that was initially valued at around $ 13 billion. E * Trade sold out to Morgan Stanley shortly after its chief executive, Mike Pizzi, said the company wanted to become an alternative for advisers unhappy with the consolidation in the custody industry brought on by the TD acquisition. Ameritrade by Schwab.

Garrabrants, in his statement, touted that the acquisition of E * Trade’s RIA custody business will add an estimated $ 1.2 billion to customers’ cash deposits, which he said, “adds another source. low cost financing potential and options for Axos Bank “.

Shares of Axos fell nearly 4% on Tuesday morning trading on the New York Stock Exchange.


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David A. Albanese

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