Although the merger between Schwab and TD Ameritrade is still expected to close in the second half of this year, integration between the two companies is expected to take 2-3 years to complete, according to TD Ameritrade Institutional President Tom Nally.
“This is a large deal and combining these two firms is going to take time — especially if you want to do it right, and that’s what we’re focused on,” he told more than 3,200 RIAs and others attending TD Ameritrade’s National LINC 2020 conference in Orlando, Florida, on Thursday.
“We’re playing the long game,” he said, adding: “We’re not looking to put quick wins up on the board. We’re looking to be very thoughtful and very methodical about how we do this to bring both of these organizations together.”
Nally still expects Schwab’s acquisition to close in the second half of this year, despite the close scrutiny the deal is getting from the government, he told attendees.
Nally pointed to an 8-K filing with the Securities and Exchange Commission made by his company Wednesday that disclosed the companies each received a request for additional information and documentary material from the Antitrust Division of the Department of Justice.
“This is not a surprise to us,” he said of the second request. “We knew that this was highly likely, but we don’t anticipate that it’s going to slow the deal down from ultimately closing in the second half of this year,” he told attendees. After all, it’s common for the DOJ to “really do their homework” and request additional information about a major deal of this size, especially because this is the “first time the DOJ is actually examining our industry,” so their investigators have to learn how the industry functions, he said.
“For the time being, we’re continuing to operate business as usual,” he noted. Even after the deal closes, however, we’re “looking at probably another two to three years before the full integration actually takes place,” he said, adding: “Until then, we fully intend to remain a company that you want to work with, a company that you can trust with your clients, with your assets and with your business.”
In the meantime, TD Ameritrade is “not slowing down” — it’s “continuing full steam ahead, with all of our efforts to help you deliver the best experience to your clients,” he told RIAs.
When it comes to many of the big questions surrounding the merger, the firm itself doesn’t “have a lot of answers because we’re so early in the game here,” he said. “Integration planning is really just beginning [and] we haven’t been able to make any key decisions yet or even start to do the analysis around the decisions” that need to be made, he noted.
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“We are certainly sensitive to concerns around service disruption,” he said, but promised the two companies are “equally committed to a smooth transition — we do want to get it done right.”