Important Update About the TD Ameritrade Acquisition of Scottrade

Feb 19, 2018

This is a big week for Scottrade customers, which includes many SMI members. If that includes you, beginning at 4:15 p.m. Eastern Time this Friday and running through the weekend, you will not have access to your Scottrade account as it is transferred to TD Ameritrade — the result of TDA’s purchase of Scottrade, which was announced in October 2016.

This change will have both near-term and longer-term ramifications.

Near-term, if you use the Fund Upgrading strategy, please be aware that the March issue of the SMI newsletter, including our updated Upgrading investment recommendations, will be available on our website at around noon this Friday.

Based on those recommendations, if you have any trades to make, we recommend making them on Friday. (Scottrade says trading on its platform will be available until the market closes at 4:00 p.m. ET Friday.)

Here’s the key reason why we’re encouraging you to make any needed trades on Friday: Whereas Scottrade requires no-transaction-fee (NTF) funds to be held just 90 days to avoid a short-term trading fee, TDA requires 180 days. However, TDA tells us “NTF positions that were purchased at Scottrade prior to the conversion will not be subject to the 180-day holding period.”

Longer-term, Scottrade customers will need to decide whether to stay with TDA. While TDA is emphasizing the many benefits it has to offer, its 180-day holding period requirement for NTF funds is a particularly glaring disadvantage for SMI members. That policy, along with more limited availability of NTF funds than at either Fidelity or Schwab, is why we rate TDA a “Poor” choice for those using Fund Upgrading. Scottrade had an “Excellent” rating for the strategy.

Mindful of this significant change to the discount broker landscape, SMI’s March newsletter cover article (available this Friday) will be a new, comprehensive broker review. In that article, we’ll give you our complete analysis of TD Ameritrade, as well as the other broker options available.

The March issue also includes an article about a new service SMI Advisory Services is rolling out that may factor into broker decisions being made by SMI readers, so be on the lookout for that article as well.

To summarize, with our new broker review becoming available online this Friday at around noon, our advice for Scottrade customers is two-fold:

  1. If you are using Fund Upgrading, make any required trades during the day on Friday;

  2. Hold off on making any decisions about changing brokers until you have read the March newsletter cover article and the new information from SMI Advisory Services.

There is more information about the transfer of Scottrade accounts to TD Ameritrade on TDA’s website.

Written by

Matt Bell

Matt Bell

Matt Bell is Sound Mind Investing's Managing Editor. He is the author of five biblical money management books and the teacher or co-teacher on three video-based small group resources. His latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, has just been published by Focus on the Family and its publishing partner, Tyndale House (April 2023). Matt has spoken at churches, universities, and conferences throughout the country and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.