Schwab's Bernie Clark christens TD deal with open arms to RIAs

After nearly a year of saying very little about the pending $22 billion acquisition of TD Ameritrade by Charles Schwab Corp., Bernie Clark, head of Schwab Advisor Services, still kept many of the details close to the chest on the closing of the historic deal.

“We’re not quite all the way there yet,” Clark understated in reference to a full integration of the now $6 trillion company that is expected to take between 18 and 36 months to complete.

In a conference call with reporters Tuesday morning, Clark kicked off by saying he is “so excited to finally be here” during a discussion that largely reiterated earlier assertions that the combined entity will not ignore any corners of the financial intermediary space.

“We are committed to every size adviser,” he said. “If they build their business, and have a true business, and they build it well,” they will be welcomed at the combined entity.

About $1.9 trillion of the newly combined $2.6 trillion in RIA custody assets came from Schwab, and Clark said there is about a 30% overlap of RIAs that had been custodying assets at both firms heading into the deal.

“We value every TD relationship,” he said. “Those just getting to know us we’re going to work really hard to make you understand our commitment to this industry. We will not be distracted. We will continue to support your business.”

In terms of the kinds of synergies that come with all mergers, Clark said, “We will have some great people who won’t be with us in the future, I’m certain.”

Even for a conglomerate responsible for $6 trillion in client assets, one of the biggest advantages of scale is the economies it creates. Some folks at TD took matters into their own hands, like Dani Fava, who in July left her job at TD as an institutional product specialist to join Envestnet.

And this week longtime TD spokesman Joseph Giannone announced he is leaving to join Dow Jones.

The TD brand, which can be traced to the mid-1970s and the First Omaha Securities brokerage firm started by Joe Ricketts, will eventually fade into Schwab. But the two brands will continue to operate separately during the consolidation period, according to a Schwab spokesman.

It is also not yet clear what will happen to TD’s Omaha headquarters or many of its other offices.

Schwab, which will move its headquarters to Westlake, Texas from San Francisco on January 1, is expected to maintain its Northern California presence, according to Clark.

OPPORTUNITIES

One thing that is clear, as two of the largest custodians combine the next closest competitors are seeing opportunities to pick up both RIA clients and personnel. Ben Harrison, the new head of Advisor Solutions at BNY Mellon’s Pershing, said the Schwab-TD merger “creates opportunities for us, because whenever there’s consolidation there could be disruption and we think that creates opportunity.”

Recognizing that most RIAs maintain multiple custodial relationships, Harrison said the merger of two big custodians could have some advisers thinking of diversifying their relationships.

“There could be a matter of advisers being overallocated to one provider and need to rebalance,” he said.

David Canter, head of the RIA segment at Fidelity Clearing & Custody Solutions, said the Schwab-TD deal has put a lot of things in motion for competing firms.

“We’ve been seeing opportunities since the deal was announced (in November),” he said. “We see opportunity and expect it to continue by virtue of the fact [Schwab-TD] is going to be serving so many clients. Advisers don’t want to be lost in sea of sameness.”

Canter added that even as financial advisers can see the economic advantages of extreme economies of scale, they might not want to participate in the equation that could mean diluted services.

“Mergers are always a tricky proposition to pull off and they’re not always successful,” he said. “The thing I think a lot of our clients and new clients worry about is will there be services as they pull together two platforms and technologies while trying to cut cost?”