Morgan Stanley Buys E*TRADE - What Does This Mean For the Home Investor?
With the market making new highs almost daily, it can be hard for individual investors to get excited about the stock market. That’s especially true when you consider that many financial services companies have taken a beating in recent months amid fears of insider trading and other shady behavior. As a result, stocks such as Visa, Goldman Sachs, and Bank of America have all fallen off a cliff. However, there are some good news stories out there if you know where to look. Take this latest development between e*TRADE and Morgan Stanley for example. While we could get into the nitty-gritty details of this partnership right now, we’ll instead focus on what it means for home investors in general – because the answers are pretty interesting!
Why Is Morgan Stanley Buying E*TRADE?
This is a great question with a simple answer: ETRADE has been struggling. Given its massive size (it’s the 8th largest online broker), this isn’t all that surprising. However, the issue is that ETRADE is also struggling to find a buyer! Almost everyone in the investment game has been put on the “no sell” list for one reason or another. For example, Charles Schwab is struggling also, and a lot of folks are concerned about its future given its recent “data breach.” Meanwhile, TD Ameritrade has been struggling with a bad reputation and onerous regulatory issues. Even more troubling for E*TRADE investors, the company’s “go-shop” provision put the company’s deal with Morgan Stanley on the back-burner. This basically puts any deal on hold while the company looks for better options. As it turns out, there weren’t many better options.
## What Does the Merger Mean For Existing e*TRADE Investors?
This is going to depend on which brokerage you currently use. The merger is expected to get regulatory approval later this year (or early next year if we’re lucky), so there’s a good chance that your account will be moved to the new Morgan Stanley-eTRADE platform before long. There’s also a decent chance that your account will be “grandfathered in” to the same terms you currently have. That’s not a guarantee of course, but it will depend on things like the nature of the merger and how long you’ve been a customer.
What Does The Morgan Stanley-eTRADE Merger Mean for New Investors?
This is one area where the merger has the potential to make a big difference. As of the time of writing, Morgan Stanley-eTRADE offer their brokerage services to investors in about 30 states. That’s not a lot, so there’s a decent chance that you’re not eligible. That could change once the merger is complete. The two companies are planning to expand the reach of their services considerably once they become one company. In fact, there’s a decent chance that the company will become the de facto leader in home investing. That’s because they are planning on offering their services to the general public, not just investors.
## What Does This Deal Mean for Consumers Who Haven’t Registered Yet?
This is really what we’ve been building towards. If you’ve been sitting on the fence about opening an account and investing, now would be a great time to do it. The merger is going to shake up the industry in a big way and attract plenty of new customers. As a result, it’s almost certain that you’ll find lower prices and lower minimum investment requirements across the board. While it’s impossible to say when this shake-up will happen, it’s probably going to happen sooner rather than later. That’s because Morgan Stanley is going to want to make good on this investment as soon as possible. That means more competition, better services, and lower prices for consumers who have been sitting on the fence.
## The Takeaway
If there’s one thing that we can learn from this story is that all of us as investors are better off when there is more competition. That’s because competition drives down prices and encourages companies to improve their services. That’s why it’s likely that the e*TRADE-Morgan Stanley merger is going to be a win for consumers. It’s going to increase competition in the industry and encourage other companies (like Fidelity and Charles Schwab) to drop their prices. That’s good news for investors of all stripes and means that now is a great time to get started if you’ve been sitting on the fence!