Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Broker Dealers

How Schwab Plans to Sweeten the Deal for Small RIAs After TD Ameritrade Merger

Your article was successfully shared with the contacts you provided.

Schwab seems to be sweetening the pie again to retain small RIAs who custody with TD Ameritrade if and when the Justice Department approves the Schwab-TD Ameritrade merger.

Rather than using its own custodial platform as the starting point for a new integrated custodial platform, Chief Operating Officer Joe Martinetto suggested during the firm’s 2020 Winter Business Update in early February, Schwab is looking to create a platform that could take parts from TD Ameritrade’s platform as well.

Starting Thursday, the firm will begin to review the two platforms — Schwab’s with 80 third-party technology providers and TD’s with about 170 to 180, to see “which ones are being used, which ones advisors like,” and the overlap between the two, said Tom Bradley, the TD Ameritrade veteran whom Schwab hired to oversee the integration of the two advisory businesses.

“The idea is that we come up with a best-of-breed platform … that has open access,” said Bradley.

The firms will start gap analysis — identifying what Schwab offers and TD doesn’t and vice versa, then filling those gaps, said Bradley, who along with Bernie Clark, head of Schwab Advisor Services, met with ThinkAdvisor.

Clark “suspects” it will include those applications that have served advisors well such as Schwab’s eAuthorization for moving money electronically and TD Ameritrade’s iRebal, for portfolio rebalancing. “The combined initiative will represent something different,” said Clark.

“It probably won’t be called Veo or Schwab Advisor Center,” said Bradley, referring to the platforms of the two firms, but it will be focused on making the “thousands of advisors from TD Ameritrade” happy and wanting to do business with Schwab.

Schwab has roughly 4,500 RIAs out of 7,500 that manage assets of $100 million or less — a number that surprised Bradley when he joined the firm.

“The smaller advisors are very good for business,” said Bradley. “They generate great returns for our shareholders and that enables us to reinvest back into the business and in technology.”

With that in mind, Schwab on Thursday launched an AI voice-activated phone system for its “core advisor” group — those with $100 million or less in assets — that is designed to connect the caller directly with the person who has expertise to answer their question. No transfers to others but a “first call resolution” system, according to Bradley.

Schwab also plans to do more matchmaking between smaller and bigger advisory firms, helping wirehouse breakaways and other smaller advisors, said Clark. Proprietary and third-party model portfolios are also expected in the future, he said.

In early February, Schwab formally pledged to independent advisors its commitment to “world-class custodial services,” including no set AUM minimums or custody fees and “best-in-class technology and open architecture” with the freedom to choose among other services.

As for the pending merger with TD Ameritrade, which is currently under review by the Department of Justice, Clark said final approval is anticipated in the fourth quarter.

— Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.