The firm, which offers institutional and personal investors commission-free trading and trade rebates by connecting them with brokers and dealers who are also market makers, has bought online brokerage firm and investment products and services provider One Financial Network Inc. and its subsidiary, One Financial Network LLC. Most notable of the brand names under the One Financial Network umbrella is The Financial Caf?, which provides low-cost trading and comprehensive investment-related resources for individual investors. Details of the acquisition weren't disclosed.
While the deal gives the firm 10,000 more individual investors, the integration of services from divisions like The Financial Caf? will address a key shortcoming of BrokerageAmerica--the lack of value-added investing information and resources in its "no frills" investing service. Meanwhile, the expansion could make BrokerageAmerica more appealing to institutional traders.
The transition of operations should be seamless, executives say, because the two companies have used the same technology vendors. Drew Sycoff, CEO of BrokerageAmerica, and Don Camillo, president and chief operating officer, will head the management of the new firm.
The acquisition indicates that BrokerageAmerica has a surprisingly sustainable business model that has been able to survive the drop-off in self-directed investors in favor of assisted financial planning in the wake of the economic downturn, says Alyssa Sibley, a senior analyst with Gomez Advisors. But while the new features and functionalities that the firm will gain through the acquisition are important, the quality of the services that BrokerageAmerica is gaining might not be top-notch. "On a scorecard, Financial Caf? has always done well because they're cheap," Sibley says. "But in terms of their on-site resources and ease of use, they don't score high."
Sibley adds that Financial Caf? was struggling, and because the online brokerage market today is one of consolidation, BrokerageAmerica may have gotten a good price on the deal, making it a worthwhile investment.