The purchase, which is still subject to regulatory approval, is expected to close in the third quarter and would include all of TradeKing Group’s offerings: the online broker-dealer service, the company’s robo-advisor platform (TradeKing Advisors), and its educational content, including its popular online trader network, a sort of social media channel for traders.
Ally would purchase TradeKing, which has $4.5 billion in client assets, for approximately $275 million.
“The trend toward digitally-based financial services continues to gain momentum with consumers in general, and we see even greater opportunities ahead as the millennial generation begins to require a broader selection of financial products, including wealth management,” Ally CEO Jeffrey Brown said in a statement about the acquisition.
Ally, which is known for its online bank accounts and auto loans, has added a stream of new services this year, announcing in February that it was adding credit card and mortgages to its lineup. This move would help it expand into the wealth management space, specifically into the online advice and robo-advisory industry.
Robo-advisors, which manage client assets via computer algorithms for a low fee, have been quickly building steam, with growth of 200% in assets under management in 2015 alone, according to research firm Aite Group. Big independent players such as Betterment and Wealthfront have led the pack, but incumbent brokerages have also jumped on board, including Vanguard Personal Advisor Services and Schwab Intelligent Portfolios.
In the statement, Diane Morais, CEO and president of subsidiary Ally Bank, said the company’s customers have a need for wealth management services and have asked for an expanded offering to fill that need. TradeKing clients would benefit from Ally’s online checking, savings and CD accounts.
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