Schwab on track to begin TD account transitions

Charles Schwab Corp. is gearing up for the massive move of financial advisers who custody client assets with TD Ameritrade Inc., and will begin preparing and educating advisers about that change in the second half of next year, with the actual moving of client accounts — dubbed a "conversion" — taking place in the last six months of 2023.

Charles Schwab said in 2019 it was buying TD Ameritrade Holding Corp. for $26 billion. In mid-2020, the merger got the approval of the Antitrust Division of the Department of Justice, paving way for the move of thousands of financial advisers eventually from TD's custody platform to Schwab's.

There are roughly 20,000 RIAs in the wealth management space who manage about $4 trillion in client assets, InvestmentNews reported last year, citing industry consultants. Schwab Advisor Services, TD Ameritrade Institutional, Fidelity and Pershing already control 80% of the market.

In a presentation to investors from 2019, Schwab reported a 30% custody market share. Combined with TD, that would create a service platform for more than 14,000 RIAs, some of whom already use both to split up client assets.

Switching accounts from one firm to the other is one of the most anxiety producing events in the work life of a financial adviser. That means a lot of work is on tap for the back offices at both Schwab and TD.

"From an integration standpoint, we are still really deep into the conversion planning process, and our primary focus is to make this as seamless a transition as possible," said John Tovar, managing director, institutional wealth management services for TD Ameritrade, during a virtual presentation Wednesday afternoon at the annual Schwab Impact conference.

"We are mapping out all the different processes, requirements, systems mapping and more," Tovar said. "Our plan is to begin communicating and getting the integration going from an adviser perspective in the second half of 2022."

"As far as an actual conversion date, or moving the accounts and assets of TD Ameritrade over to the Schwab platform, we are still targeting that for the second half of 2023," Tovar said. "We do have an unwavering commitment to all advisers who go through this process, but we will ensure that you are prepared, well informed, get information and training material well in advance of the conversion."

Meanwhile, TD Ameritrade client accounts will get new account numbers once they hit Schwab's custody platform.

“New account numbers will be assigned with the conversion over to the Schwab platform,” Tovar said. “That’s just based on internal system differences. The good news is that all the attributes on the existing client accounts will come over, meaning things like standing instructions, transactional history and more."

Schwab has begun paving the way for the transition. In August 2020, the company said it would integrate TD Ameritrade’s thinkorswim and thinkpipes trading platforms, as well as iRebal, an institutional portfolio rebalancing tool.  

The discount brokerage plans to combine TD’s trading platform with its own platform, StreetSmart Edge, to provide a unified trading experience for clients.