Acquisition could shore up independent RIA custodian's third-place position. TD Ameritrade has agreed to buy Fiserv's RIA custody and trading business. The acquisition stands to add another $17 billion managed by about 500 RIAs to TD Ameritrade's RIA service agency TD Ameritrade Institutional (TDAI), solidifying its position as the number three RIA custodian.

"RIAs make up one of the fastest-growing client segments in financial services, and we are committed to intensifying our position in the space and further advancing our client segmentation strategy," says Joe Moglia, CEO of Omaha, Neb.-based TD Ameritrade.

Bigger

TD Ameritrade will pay $225 million in cash and an additional $100 million "based on achieving revenue retention targets," according to a TD Ameritrade press release. TDS Ameritrade will also "reimburse Fiserv for capital remaining in the business at close. The transaction is expected to be immediately accretive."

The discount broker's acquisition of Fiserv's Investment Support Services (ISS) also includes $10 billion held in 2,200 defined-contribution plans administered by 80 independent third party administrators.

The additional RIA assets will help TD Ameritrade keep its spot as the third largest RIA custodian after Schwab and Fidelity. At the end of 2006, TDAI had about $70 in assets under administration. But by early February 2007, number four RIA custodian Pershing the had about the same, in large part due to the migration of about $10 billion as a result of its 2006 acquisition of Neuberger Berman 's RIA custody business.

TDAI's president Tom Bradley says he's confident that Fiserv's institutional client base "will benefit from our industry-leading technology, flexible service and ongoing advisor advocacy efforts."

With $100 million at stake, it seems reasonable to assume that Brookfield, Wisc.-based Fiserv will make every effort to help its institutional clients make the move to TDAI.

TD Ameritrade is the result of the 2005 merger between TD Waterhouse and Ameritrade.

The deal is expected to close in the fourth quarter of 2007. -FWR

.