Ally Financial expands into wealth management

Ally Financial has signed an agreement to acquire TradeKing Group, a digital wealth management company in a bid to extend the range of finance services offered to its auto loan and lease customers.

The transaction, valued at around $275 million, is expected to close in the third quarter and includes an online broker/dealer, a digital portfolio management platform, and educational content and social collaboration channels.

“The addition of wealth management is the next key step in Ally’s digital product evolution and will create a powerful combination of segment-leading direct banking and innovative investment services in a single integrated customer experience,” said Ally chief executive officer Jeffrey Brown. “This transaction presents a compelling opportunity for customers and a logical growth opportunity for Ally.”

Brown continued: “The trend toward digitally-based financial services continues to gain momentum with consumers in general, and we see even greater opportunities ahead as the millennial generation begins to require a broader selection of financial products, including wealth management.”

“We see strong alignment between Ally’s loyal and digitally-savvy customer base and TradeKing’s innovative, client-centric business. This transaction positions Ally to further capitalize on emerging market trends, drive additional efficient deposit growth and diversify our revenue stream by adding fee-based income – all of which we believe will enhance shareholder value over time,” he added.

TradeKing’s offering consists of an online broker/dealer for self-directed investors, professionally-managed portfolios through an automated and fully-transparent online process, and an extensive set of educational content and social collaboration channels. TradeKing has approximately $4.5 billion in client assets, including approximately $1.1 billion of cash and cash investments, 260,000 funded accounts and 20,000 daily average revenue trades (DARTs).

“Ally and TradeKing have a shared philosophy in bringing customers and clients an exceptional digitally-oriented experience, with award-winning customer service and competitive products,” said Diane Morais, CEO and president of the Ally Bank subsidiary.

“We look forward to welcoming the TradeKing team to the Ally family as we aim to deliver additional products and services to our combined set of customers under the Ally brand, which is a recognized leader in digital financial services,” she added.

Earlier this year, Ally also announced it would add credit card and mortgage products to its Ally Bank franchise.