TD and Schwab tell advisers it's business as usual, for now

In an FAQ published this morning, TD said advisers likely won't see changes for a year

Nov 25, 2019 @ 2:10 pm

By Ryan W. Neal

In the wake of Charles Schwab Corp.'s announcement that it is buying TD Ameritrade Holding Corp., independent registered investment advisers with assets on TD's custody platform are wondering what the deal means for their business and their clients.

TD's answer: "For now, it's business as usual."

Versions of that message pop up six times in a list of frequently asked questions that TD published this morning on its website.

Schwab and TD expect the deal to close in the second half of 2020 barring any regulatory hold-ups. Until then, the two will operate as separate companies and advisers should expect to have uninterrupted access to the TD Ameritrade Institutional Advisor platform and retain their same service team.

The integration of the two companies is expected to take as long as 36 months after the deal is closed, but the FAQs do not directly address what the transition will require of financial advisers.

Many worry the acquisition will create a "repapering nightmare" for advisers forced to move client accounts to a new custodian.

"TD Ameritrade and Schwab have strong and capable teams that will work together to manage a smooth transition process for your clients and onboarding for your firms," the FAQ says, adding that it will keep advisers informed about the process via email and on the TD Institutional website.

The FAQ also recommended that RIAs continue using the TD Institutional platform rather than trying to transition to Schwab Advisor Services on their own, as the official conversion will be simpler.

The companies are "sensitive" to advisers' concerns about service disruptions during the transition and repeated they are dedicated to a "smooth transition." However, the FAQ does not address questions about whether Schwab will continue supporting the smaller RIAs on TD's platform.

To help advisers communicate the change to clients, TD included a letter template that firms can use for client outreach.

"As we move forward, you can count on regular communications from us to keep you informed," the FAQ states. "As always, advisers can continue to contact their adviser service team for any questions or concerns."

Schwab and TD have not revealed information about people who hold accounts at both firms, and the question of client overlap could be significant for RIAs, said Kerim Derhalli, co-founder and CEO of fintech firm Invstr.

"If client overlap is high, expect for there to be quite a bit of consolidation among the workforce of RIAs," Mr. Derhalli said in an email. "The FAQ document confirms that this deal is more about cost-efficiencies and savings rather than delivering a superior client experience."

A TD Ameritrade spokesperson directed a request for comment to a Charles Schwab spokesperson, who declined to comment beyond the company's press release about the acquisition.

In addition to information for RIAs, the FAQ answers more general questions about the terms of the deal, impact to the board of directors and the role TD Bank Group will play in the combined entity. TD admitted there will be job losses after the deal closes, though the company did not give specifics of what will happen to its headquarter facilities around the country.

The FAQ also confirms the combined company will continue to use the Schwab name and brand.


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