This story has beeen updated to include reaction from advisers.
The
Charles Schwab Corp. is pulling a TD Ameritrade veteran, Tom Bradley, off the shelf to lead its custody business for smaller registered investment advisers.
Last month, Schwab
said it had agreed to buy TD Ameritrade Holding Corp. for $26 billion in stock.
One question hanging over that combination was
where it left the small RIA, the backbone of the financial advice industry.
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It appears that Schwab, at least in part, has addressed that issue with the hiring of Mr. Bradley, a former senior executive at TD Ameritrade, including a 12-year stint as the head of its RIA custody business. TD Ameritrade built its reputation in the RIA custody industry by focusing on smaller advisers.
When he joins Schwab's adviser services business next month as senior vice president, Mr. Bradley will oversee custodial support services customized to RIAs with up to $100 million in assets under management.
Mr. Bradley will also play a leadership role in helping integrate the two firms' adviser services businesses, Schwab said in a press release.
"Tom knows the independent adviser space in great detail, and we're fortunate to be able to add his depth of experience and breadth of industry relationships to our Advisor Services leadership team," said Bernie Clark, Schwab executive vice president, head of Schwab Advisor Services, in a statement.
Mr. Bradley left TD Ameritrade in 2017.
Schwab Advisor Services most recently reported 7,600 RIAs as clients with $1.6 trillion in client assets, according to
InvestmentNews data, while TD Ameritrade Institutional reported at least 7,000 RIA clients but did not state the amount of assets those advisers managed.
Reaction by advisers to Mr. Bradley joining Schwab was extremely positive.
"I cannot emphasize enough how encouraging this news should be for the younger, smaller financial adviser crowd," said Josh Brown, CEO of Ritholtz Wealth Management, in a Tweet Friday afternoon. "Tom Bradley is a wonderful guy and cares deeply about the future of this profession."
Ritholtz, which has $1 billion in client assets, and uses both Schwab and TD Ameritrade for custody, according to its Form ADV
"This is an excellent hire," said Robert Costello, president of Costello Asset Management, which has $130 million in client assets and uses both Schwab and TD Ameritrade for custody.
"He's well-respected, and everyone likes him," he said. "I think he's been hired to alleviate the concerns that people have regarding the deal."
Schwab in October cut commissions for retail customers to zero for stock, exchange-traded funds and options trades online. Competitors, including TD Ameritrade, quickly followed.
In the wake of the Schwab-TD Ameritrade deal, advisers have been anxious. Stoking their fears is the question of what impact the severe price cutting that has gone on for retail customers will affect service and fees for RIA clients.
Now that the commissions have been cut for the commission-paying consumer, do custodians like Schwab start charging RIAs for service, Mr. Costello asked.
"After the deal, if the merged companies dominate the RIA market to such an extent, will they be able to raise prices on RIAs without any market forces constraining them," he wondered.
