Scottrade was an online brokerage firm that served more than 3 million accounts in the U.S., with $170 billion in assets under management. Founded in 1980 by Rodger O. Riney, the firm offered a full lineup of investment products, trading and banking services, market research tools, and about 500 branch offices throughout the U.S. that provided in-person support and small-group educational seminars. When Scottrade launched its website in 1996, it was one of the first brokerages to offer online trading.

After 37 years in business, Scottrade was acquired by rival brokerage firm TD Ameritrade on September 18, 2017. Here’s a quick look at what happened to Scottrade, and what the deal means for customers.

Did Scottrade Close?

Yes. In late October 2016, two of the largest online brokerages – TD Ameritrade​​​​ and privately-held Scottrade Financial Services – announced they had entered into a definitive agreement for TD Ameritrade to buy Scottrade for $4 billion in cash and stock. Two years later, on September 18, 2017, the acquisition was completed. In a statement, TD Ameritrade said, “The transaction combines two highly complementary organizations with long histories of helping millions of people invest in their financial futures.” 

Why Did Scottrade Close?

The decision to sell came at a time when the brokerage industry was facing a lot of challenges, including demands for innovative technology and new federal rules requiring firms to act in their clients’ best interest when advising on retirement accounts. “He [Riney] and his company are looking forward and seeing a lot of industry challenges,” said Michael Flanagan, an independent securities analyst/consultant in the Philadelphia area, in response to Scottrade’s announcement to sell. “Wall Street continues to be assaulted by the regulators, so the compliance issues are never ending…They’re spending more money on technology and legal issues.”

Scottrade wasn’t the only online brokerage deciding to close shop in 2016. In April of that year, Ally Financial agreed to buy online broker and independent advisor TradeKing Group, for about $275 million. And in July, E-Trade Financial Corporation announced it had entered into an agreement to acquire Aperture New Holdings, the parent company of options and futures trading company OptionsHouse, for $725 million in cash.

Scottrade’s decision to sell was also influenced by Riney’s health issues: In late 2015, he announced he had been diagnosed with multiple myeloma, an incurable form of blood cancer. Shortly after, Riney and his wife, Paula, made a $5 million gift to support multiple myeloma research at the Alvin J. Siteman Cancer Center at Barnes-Jewish Hospital and Washington University School of Medicine, a cancer treatment, research and education institution where he was receiving treatment. “When we learned there was not a lot of money going to multiple myeloma research, Paula and I decided to get more involved,” said Riney. “This is cutting-edge work, and our initial investment may move the needle by opening the door for additional grant funding.”

What Happened to Scottrade Accounts?

Following the completion of the acquisition, Scottrade Bank accounts were closed as of February 17, 2018. Bank account balances were automatically deposited in the customer’s Scottrade brokerage account or sent as a check to close out the account. Brokerage account balances were transferred to the customer’s new TD Ameritrade brokerage account. The transition was intended to be as seamless as possible for Scottrade customers, who could log into their new TD Ameritrade accounts by using their existing Scottrade account numbers as the UserID and Scottrade password. Scottrade customers can access their previous statements and tax documents through TD Ameritrade.

What Did Scottrade Reviews Say?

Scottrade was reviewed by several sites who unanimously gave the broker high marks for customer service. Its reputation as a firm that cares for its customers was mostly based on the 500 branch locations and the rapport it had built with clients since its founding in 1980. Those advantages were a holdover from an earlier, pre-internet era. Though the company offered online trading since the mid-1990s, Scottrade reviews often pointed out that the online experience was not a company strength.

The qualities Scottrade brought to the 21st century from its 20th century roots were also in some cases liabilities. The brokerage industry shifted from a few high-net-worth clients handled through personal interactions in the 1970s and 80s to far lower transaction fees and many more retail investors with a do-it-yourself attitude in the 1990s, 2000s and 2010s. The internet brought down barriers between investors and their ability to make trades without making a call to their broker. After the 2008 financial crisis, faith in "your guy" financial advisors and brokers took a hit, especially with younger investors. By 2016 Scottrade reviews were critical of the company for its high minimum balance on premium accounts, it's antiquated online interface and its total lack of commission-free ETFs.

What Does the TD Ameritrade-Scottrade Deal Mean for Customers?

Scottrade brokerage accounts automatically transferred to TD Ameritrade as part of the transition process. The newly combined company serves almost 11 million client accounts representing $1.1 trillion in assets. Scottrade had a reputation for providing good customer service, and that’s something Tim Hockey, president and CEO of TD Ameritrade, hopes to continue. “Scottrade is so well known for outstanding client care – a credit to the culture that Rodger Riney and thousands of Scottrade employees have built over the last 37 years. It’s on us to continue that tradition.” 

No doubt, the acquisition adds scale and distribution capabilities for TD Ameritrade’s investing services and education. According to a press release, “The combination of TD Ameritrade’s award-winning trading technology and long-term investing solutions with Scottrade’s larger branch network is expected to enhance the investing experience for millions of investors.” When comparing the expanded TD Ameritrade to a popular discount broker like Charles Schwab, what TD Ameritrade lacks in low prices, it makes up for in customer service.

Scottrade customers who transitioned to TD Ameritrade now have access to:

  • TD Ameritrade’s platforms, including the TD Ameritrade website, the pro-level thinkorswim platform, TD Ameritrade mobile and TD Ameritrade Mobile Trader
  • More trading products to choose from, including complex options, futures and foreign exchangeMore investment guidance and advice, including managed portfolios, robo advisors and free goal planning services
  • A wider range of investor education offerings, including classroom learning, one-on-one coaching, paper trading and webcasts
  • Hundreds of branches across the U.S.

Before the acquisition, Scottrade had about 500 branch locations throughout the U.S. Today, those branches have either been converted to TD Ameritrade locations or closed, and customers can now visit one of TD Ameritrade’s 360+ branch locations.

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