TD Ameritrade addresses the elephant in the room at annual conference

Tom Nally shares what he can about the pending merger with Schwab; tells advisers they won't need to repaper client accounts

Whether this year marks the last annual conference for TD Ameritrade Holding Corp. or not, the company’s message this week at the gathering of 3,200 registered investment advisers was that it’s business as usual until it isn’t business as usual.

Just two months after the announcement that Charles Schwab Corp. plans to acquire TD in a $26 billion deal, TD Ameritrade Institutional president Tom Nally said during the opening session at the 24^th annual TD LINC conference that the company is not ruling out a 25^th annual conference in 2021.

“We’re going to start planning a week from now for LINC 2021,” he said after sharing as much about the pending consolidation of the two giant custodians as is legally permitted.

“It’s game on, but obviously anything could happen,” Mr. Nally added.

The “anything could happen” part is what many of the RIAs in attendance focused on as they gathered to network and attend sessions promoting TD’s latest platform innovations and services.

“They’re talking about technology, but we don’t even know if we’ll be using this technology six months from now,” said Freddy Garcia, first vice president at Left Brain Wealth Management.

“I ask if anything is being postponed in light of the merger with Schwab and they say ‘no,’” he added. “But I don’t think they have the answers yet, so they’re just going along as if nothing is happening.”

Mr. Nally said as much in his opening keynote, explaining that while the transaction is likely to be completed later this year, the full transition of what will become a custodian with approximately 50% market share could take two or three years to complete.

“Deals this big take time, and we’re barely past the starting line right now,” he said. “Due to regulatory restrictions, we’re extremely limited on how we can engage” with RIAs on the topic.

While the Department of Justice requested additional information Wednesday from both Schwab and TD as part of its research into the deal’s antitrust implications, Mr. Nally said he believes the timeline is unchanged.

“Everybody here at TD is laser-focused to ensure that you and your teams continue to get the best service, and you should know that our commitment remains strong,” he said. “We are not slowing down; we’re not taking our foot off the gas pedal. We’re committed to helping you run your business in the best way possible.”

One issue that Mr. Nally was able to settle with certainty was that RIAs will not be required to repaper client accounts as part of the transition to whichever platform the combined firms ultimately adopt.

“The answer is no, for the vast majority of accounts you will not have to repaper,” he said, sparking generous applause.

“Knowing we won’t have to repaper is very exciting; that will make it an easier sale to the clients,” said Ron Malech, senior vice president of business development at Cardinal Capital Management.

“We were concerned at first about the sale because, just like with the market, the ‘unknown’ causes concern,” Mr. Malech said. “We know this is early in the game, and we’re hearing what we expected to hear from the company.”

While most advisers say they have not gotten a lot of questions from clients yet about what the pending merger means to them, there is no denying the level of concern and curiosity among advisers.

“The mood this year is a lot more somber, and the sessions are more thinly attended,” said Mr. Garcia of Left Brain Wealth Management.

Rick Mida, partner and wealth adviser at Canopy Wealth Management, selected TD as a custodian in August 2018 when he and his team left Northwestern Mutual to go independent.

“When we did our due diligence, we chose TD over Schwab because we really liked TD’s technology, service, and they were great to deal with,” he said. “We’re definitely a little fearful. When these two companies get together, which platform will they use? But it’s still early and TD is saying the clients won’t even notice it until 2023.”

That’s the message Mr. Nally continued to drive home during a follow-up interview when asked about competing custodians increasing their efforts to recruit RIAs away from TD.

“I would caution people from making rash decisions because the combined entity could prove a far greater value proposition,” he said. “We’re getting questions about what the future holds, and uncertainty is not your friend. We’re trying to make people understand it’s not going to affect you tomorrow.”

John Hill, chief executive of Pinnacle Advisory Group, also acknowledged the somber feeling of knowing that 2020 could be the last LINC conference.

Pinnacle has custodial relationships at TD, Schwab and Fidelity Investments.

“One of the things we’ve enjoyed about TD is the entrepreneurial feel,” Mr. Hill said. “There’s the mood of, ‘Is this one of the last experiences we’ll have at this level, and will we have this in the future?’”

Meanwhile, at Edelman Financial Engines, which divides its $230 billion in assets between TD and Schwab, president and chief executive Lawrence Raffone is hoping for the best.

“We have strong relationships with both companies and so far, it’s business as usual, but we just want no disruptions for our clients,” he said. “Time will tell. You do these transactions to get the best of the best, and our hope is you get the best out of both companies.”