When it comes to mergers, there are winners and losers.
Case in point: industry veteran Tom Bradley, who found himself left out after TD Ameritrade bought Scottrade two years ago for $4 billion and who is now back in business thanks to Charles Schwab’s planned $26 billion purchase of his former employer.
Bradley, the former president of TD Ameritrade’s Retail and Institutional businesses, is set to join Schwab’s Advisor Services business as its senior vice president on Jan. 13, Schwab said early Friday. He will oversee custodial services for RIAs with up to $100 million in assets and help integrate the two firms’ advisor-services businesses.
“Woa. BIG industry news! Schwab hiring former TDA Institutional pioneer Tom Bradley to lead its “Core” <$100M AUM segment,” said popular blogger and planner Michael Kitces on Twitter. “Should be a big relief for small RIAs fearing Schwab will abandon them. (Unclear how far below $100M Schwab will go, though?).”
Kitcces continued: “For “smaller” (<$100M) RIAs that have been fearful that Schwab would shut the door on them after the #Schwabitrade merger closed, this should be a huge relief. Schwab isn’t hiring @TomBradley_USA to abandon small RIAs. It’s hiring Bradley to build with small RIAs.”
Bradley spent three decades at TD Ameritrade, including about five years as president of the firm’s Retail Distribution unit and 12 as head of its Institutional business.
“We’ve known Tom personally for years, and have long admired his successful track record working across the investment services community,” said Bernie Clark, head of Schwab Advisor Services, in a statement.
Bradley will report to Clark and be based at Schwab’s campus in Westlake, Texas (near Dallas), after he relocates from the East Coast. “There couldn’t be a more exciting time to join Schwab,” he said in a statement.
The “Schwabitrade” deal, announced last week, unites two firms with a total of about $2.4 trillion in assets tied to RIAs and their clients and $2.7 trillion in individual investor assets.
“I cannot emphasize enough how encouraging this news should be for the smaller/younger financial advisor crowd. Tom Bradley is a wonderful guy, cares deeply about the future of this profession,” tweeted Ritholtz Wealth Management CEO Josh Brown on Friday.
Still, the new role won’t be a walk in the park, cautions Tim Welsh of the consultancy Nexus Strategy: “The challenge for him with this new gig will be that small RIAs will not be a priority for the overall custody business, simply because of the lack of potential for monetizing small accounts.”
In fact, being able to make the business case for more resources to support this segment might fall on deaf ears, thus creating frustration and potential backlash, according to Welsh. “But if anyone can do it, it is Tom Bradley!” he added.
Schwab says it’s working hard on services for RIAs with under $100 million in client assets. These efforts include virtual business consulting, online events, an almost 50% cut in pricing for electronically traded transaction-fee mutual funds and Portfolio Connect, a free portfolio management system for advisors using its custody services, the firm says.
“We are building a more modern service model, one that will adapt to the needs of the firms we serve, regardless of their size,” according to Clark.
As Kitces pointed out in a tweet, “Of course, there are a LOT of smaller RIAs at TD Ameritrade today specifically because they got rejected by Schwab’s AUM minimums in the past. Which left a bad taste in a lot of mouths. That won’t instantly vanish just because Schwab says “Ok, NOW we’ll work with you!””
He added: “The bottom line, though, is that Schwab’s hire of @TomBradley_USA is a big deal, not just for his experience to build/scale w/ <$100M RIAs, but also strategically to soothe the nerves of TDA RIAs. What a monster win for Schwab. Now we just have to wait to see execution? :)”
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