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Friday, March 31, 2006

Consolidation Continues

While writing this year’s broker story, I asked quite a few people what they thought about the ongoing consolidation in the industry.  I also asked the various interviewees to tell me, off the record, which brokers were obvious takeover candidates.  Several mentioned that they thought Terra Nova Trading would be on the block, and as it turns out, they were right.

This morning, Rush Financial Technologies, Inc., dba RushTrade Group (OTC.BB: RSHF) announced that it has agreed to acquire 100% of the outstanding membership interests of Terra Nova Trading, LLC (“Terra Nova?), Market Wise Securities, LLC and Market Wise Stock Trading School, LLC.  Both firms have been operating in the frequent trader space, marketing themselves to day traders and hedge funds. 

According to a press release, the combined companies will have approximately 20,000 customer accounts and over $500 million in customer account assets. Mr. D. M. “Rusty? Moore, Jr., Chairman and Chief Executive Officer of Rush said, “We are very excited about the combination of Terra Nova’s ‘back-end’ technology with RushTrade’s proprietary ‘front-end’ platform.”

Terra Nova has long offered Townsend Analytics’ RealTick trading platform to its clients.  Terra Nova has been self-clearing for two years, while RushTrade has cleared through Penson.  Penson’s back end technology is quite rigid, from what I’ve seen, and a move to self-clearing would be in the interest of Rush’s customer base. 

The release indicates that the RealTick platform will continue to be offered, and includes a comment from Stuart and MarrGwen Townsend, the founders of Townsend Analytics, Ltd.  “We will continue to work together with Rush and Terra Nova to provide their customers with the best possible trading solutions,? they say. 

Posted by twcarey on 03/31 at 02:43 PM
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Thursday, March 30, 2006

Has Your Full Service Broker "Commodotized" You?

A report recently released by Cerulli Associates, a Boston-based consulting firm that specializes in financial services, says that investors with less than $10 million in assets are given short shrift from financial advisers.  The group hardest hit is those with $500,000 to $2.5 million on hand to invest—the report calls them “leftovers.”

Leftovers!  Wow.  A market segment that represents approximately 10% of the U.S. population, that has $8 billion total to invest, is being underserved?  Cerulli Associates says that this group is underserved by financial advisors because its needs are “extremely disparate.” They can’t pigeonhole these so-called “emerging affluent” investors, so they just run them through some standard asset allocation schemes and collect their fees. 

From personal experience, I know that an account that had over $400,000 in it at one point was marginalized by a full service broker.  I’m moving pieces of that account to a couple of online brokers so I can take better care of those assets. 

Several online brokers have announced that they are focusing on a group they call “Mass Affluent,” with $50,000 to $500,000 to invest.  E*Trade ( and Ameritrade ( are leading this pack, offering additional services and specialized pricing to those who fall into this category. 

There are some who have special goodies for account holders with $1 million and up.  RushTrade ( has a special way of calculating margin fees for those who have more than $5 million in their accounts.  Charles Schwab ( has a suite of “Signature Services” for customers with more than $1 million that includes lower transaction fees and some extra research. 

This market segment, if Cerulli Associates is right, is seriously underserved.  There is probably some combination of online tools and offline hand-holding that will hit the sweet spot.  We’ll keep looking. 

Posted by twcarey on 03/30 at 11:52 AM
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Tuesday, March 28, 2006

Hey Kids!

I often get asked about sites that promote financial literacy for kids.  I’d love to see high schools do more to educate students about real-life financial issues, such as balancing checkbooks and avoiding credit card ripoffs. 

Here are some sites for kids who want to learn more about the U.S. economy and other financial issues:

The Federal Reserve launched a site on March 27 aimed at kids aged 11-14.  It’s short and sweet, and capped with a 10-question quiz.  I got 10 out of 10, so I now feel like a very successful and knowledgeable 14-year old.  Here’s the site:  The Federal Reserve’s Kids Page.

The Institute of Consumer Financial Education has a section on Children and Money. This site offers money tips for young Americans, financial information and education resources, a credit education course for high school seniors and college students, education and information on the dangers of debt accumulation while young, savings and investment information, first-time credit information and financial planning education.  It seems to have a fair chunk of content aimed at parents and grandparents, including a section entitled, “Are Your Children Getting Hooked on Credit?” Check it out here:  Children and Money.

The Young Americans Center for Financial Education includes a Financial Tips page that gives kids the lowdown on being money-wise, avoiding debt, and responsible use of your debit/ATM card.  The group offers 7 week-long sessions this summer, aimed at kids from 2nd grade through middle school, which will take place in Denver and Lakewood, CO.  Check out the page that offers Financial Tips and then browse some of the other features, such as the Young Americans Bank. 

Moneyopolis is an online game in which you help Xerbie, an alien with money problems who got stuck on Earth, figure out how to get back into space.  You travel from Home Sweet Home to the Workplace, then to the Bank, playing whimsical lessons along the way.  It’s set up for classroom use as well.  Check out Moneyopolis

That’s it for now—I will continue to add to this topic as I find more sites worth your while. 

Posted by twcarey on 03/28 at 12:14 PM
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