E-Trade targets mass affluent

FWR Staff

10 August 2005

Discount broker goes up market, a bit, with Kobren acquisition. One day after it said it would buy Harrisdirect from BMO Financial Group, E-Trade Financial has unveiled plans to acquire Kobren Insight Management , a private-client investment consultancy. E-Trade says the move is intended to strengthen its hand in the mass-affluent marketplace.

The firms are staying mum about the financial details of the transaction.

“The acquisition advances regional advisor strategy, personalized wealth-management services to its retail and corporate services clients with over $250,000 in assets,” according to an E-Trade press release.

Maybe more

The online broker says the latest acquisition, along with the Harrisdirect deal and its January 2005 purchase of wealth and retirement planning firm Howard Capital Management , signals E-Trade’s “expansion from a trading-focused organization to a fully-integrated financial services firm that has the unique opportunity to monetize all aspects of the customer relationship among its retail and institutional business segments.” It also pegs the merger with KIM as “the latest in a series of consolidation initiatives” that “strengthens E-Trade’s influence among retail investors with sizable assets.” E-Trade adds that it expects the KIM deal, which is slated to close before the year is out, to add nearly to $10 million in revenue and $2.3 million in net income in its fiscal 2006. KIM is the investment advisor to the Kobren Insight Funds.

“E-Trade Financial seeks to enhance its advice and wealth-management services by creating high-value tools and services targeted to each of our retail customer segments,” says E-Trade president and COO R. Jarrett Lilien. “The acquisition of will bring customer relationships that can be monetized through our cash, investment and credit solutions.”

New York-based E-Trade adds that it’s keeping an eye out for wealth-management acquisitions in New York, Philadelphia, Metro D.C., Atlanta, Orlando, Chicago, Dallas, Denver, Scottsdale, San Diego, Orange County, Silicon Valley and San Francisco.

KIM will keep its name. There are no plans to reduce its staff. The Wellesley, Mass.-based firm has offices in Longboat Key, Fla., and Lincoln, Neb. It manages over $900 million in about 1,500 accounts, according to its most recent filing with the Securities and Exchange Commission. –FWR

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