Schwab promises to support advisers through integration hiccups

The official theme of the 2022 Charles Schwab Impact conference is “forward together,” but it could easily have been “managing expectations.”

The annual event, which brought 5,000 attendees, including 2,500 financial advisers, to Denver this week, is Schwab’s last Impact before it completes its mega-merger with TD Ameritrade. The custodian recently announced that it would migrate all TD advisers, client accounts and assets to the Schwab brokerage platform by Labor Day 2023.

While the firm is doing everything it can to ensure the integration goes off without a hitch — and without requiring advisers to do any repapering of client accounts — hiccups and technical glitches are inevitable with a data migration of this size, Schwab executives said. Rather than trying to project perfection, Bernie Clark, managing director of Schwab Advisor Services, and Walt Bettinger, CEO of Charles Schwab Corp., used their Tuesday keynote to assure advisers that Schwab will support them through the transition.

“It won’t be without incident, unfortunately, but we’ll be there for you,” Clark said.

Despite difficult market conditions that are leading some firms to cut costs, Schwab intends to continue hiring more support staff to not only get advisers through the migration, but help them see the benefits of the merger for years to come, Bettinger said.

“It’s big, it’s complicated, no one has ever done anything of this size or scope in our industry,” he said. “We didn’t want to take the easy way out.”

“We will never ask for your forgiveness, but we may have to ask for your patience,” Clark added.

Integrating Schwab and TD’s brokerage platforms has turned out to be more expensive and time-intensive than originally planned in part because of the war between Russia and Ukraine, Bettinger said. Thinkpipes and thinkorswim, the TD trading programs that Schwab announced it would keep, were primarily supported by developers in Russia.

Though everything had to be moved out of the country, it was “the right thing to do,” Bettinger said.

The executives also touched on the industrywide theme of personalization, which Bettinger in the past has referred to as a “freight train.”

“We recognize that the combination of technology and efficiency is driving the industry to personalization,” he said.

However, where things like fractional shares and direct indexing continue to lag is in the cost to advisers. Schwab plans to drive the cost of this technology down to match that of regular ETFs and mutual funds.

“We’re going to make that happen: disrupt that industry in a manner that’s going to help you serve more people with personalized investing,” Bettinger said.

The two also answered question from the audience, such as whether Schwab will address the current market conditions by charging independent registered investment advisers a custodian fee. Bettinger said the company plans to accept the hit to its margins, while Clark made a pledge that it will not start charging RIAs to be on Schwab.

“We are not going to have a custodial fee at Charles Schwab,” Clark assured the audience.

[More: Schwab exec updates progress on integrating TD Ameritrade technology]