Interactive Investor Plc has agreed to buy TD Direct Investing from TD Bank Group (its European direct investing business) in a deal financed by private equity group J.C.Flowers . Both businesses offer low cost execution-only share dealing to private investors. The combined group could be the second largest such platform in terms of assets under management in the UK after Hargreaves Lansdown.
The enlarged group will be led by Interactive Investor’s current CEO Adam Seale and will be called Interactive Investor. No immediate changes are anticipated in either service to existing clients, but clearly there may be some simplification and standardisation on a single platform in due course.
ShareSoc Director Mark Bentley, who is a user of the TD DIrect service, had this to say: “I have concerns about this because I initially chose to use TD Direct because of the good international trading facilities and the fact that they support voting of my shares via the Broadridge service which enfranchises nominee shareholders”.
Comment: It is no secret that times are tough for stock-broking businesses with volumes declining and low interest rates damaging the profits they historically made on cash floats. Competition has also been increasing as new entrants have moved into the market in the last few years. So we now see consolidation taking place with the weaker operators being acquired and prices being raised by others.
But it tends to be disconcerting for retail investors to face such churn. They pick a broker based on facilities, ease of use and price and learn how to use it. Soon after they may face a transfer to a new platform with a different cost structure and different user interface, if not more expensive. One cannot thwart the economic logic of business necessity for these companies, but even so it can be very annoying. Let us hope that Interactive Investor do not drop the facilities offered by TD Direct.
Clients of TD Direct may wish to express their concerns to the new management.