TD Ameritrade Scores Big

The brokers are scrambling to add investment services and products to cater to the so-called mass affluent investor -- one with between $100,000 and $1 million in investable assets. Online brokers also are looking to diversify beyond online trading, where margins have been narrowed by fierce price competition.

Last week, Just2Trade.com became the latest outfit to enter the fray, advertising an unlimited amount of trades online for $2.50. Others are promoting free online trades, such as Bank of America(BAC Quote) and Zecco.com.

Joe Moglia, TD Ameritrade's CEO, says that the impact of free online trading has been "negligible." He said Tuesday that Ameritrade is becoming more of an asset gatherer and "the provider of choice to the mass affluent family in this country."

TD Ameritrade's profit gain came on the heels of last year's merger between Ameritrade and TD Waterhouse's retail brokerage business. The company made the deal in an effort to add financial advisers to its offerings.

"We're pleased with our revenues, our assets, our trades, our net new accounts," Moglia says. But the "growth of qualified accounts -- we'd like to see them improve."

Moglia cautioned that that won't happen until the integration of TD Waterhouse and the new client segmentation platform are completed.

He added that the company is also creating a new commissioned-based sales and service team to replace the 100 or so employees that were housed in call centers across the country.