The Changing Financial Landscape

Abstract

Financial mergers happen all the time. Some companies have even created businesses out of all these financial mergers and acquisitions such as Sandler O’Neill + Partners, “a full-service investment banking firm specializing in financial services companies.”¹ There is a need for such firms considering that many financial mergers do not work out too well. Many have been colossal disasters and painful, like putting a dog to sleep. US Trust’s acquisition by the discount broker, Schwab, in 2000 was doomed from the start: “The union of the two firms kicked off a clash between the populist Schwab and white-glove U.S. Trust. It also exposed long-term problems in U.S. Trust’s business, notably the outdated state of its technology and its failure to serve investors’ increasingly sophisticated demands.”² Founded in 1853, US Trust’s clients are high net worth, white glove, and somewhat demanding clientele, which is different from low-fee, self-serve, discount-paying Schwab clients. Merging a discount brokerage with a private wealth management platform was beyond mismatched. US Trust was then sold to Bank of America which appears to have been in better match.