images of Schwab and TD Ameritrade signs (Photos: Shutterstock)

Following Charles Schwab’s $22 billion purchase of TD Ameritrade on Oct. 6, Schwab is evaluating which platform features will shift over to the combined platform and which won’t, according to Andrew Salesky, senior vice president of Digital Advisor Solutions at Schwab Advisor Services.

“It’s not as if we are going to duplicate every feature” that the companies currently offer, he said Thursday, on a call with the media.

“We are looking at those features that are … most highly utilized, valued by clients [and] ensuring those are included,” he said. While some capabilities won’t make it on day one of the combined platform when it launches, some may potentially be added at a later date, Salesky said.

“We are very committed to creating one platform — one set of tools and capabilities — that really bring together the best of both” firms,” he told reporters.

On Oct. 1, Schwab said its integration of TD Ameritrade should take about 18 to 36 months to complete. This timeline means the technology tie-up and related efforts won’t be done until April 2022 at the earliest and by October 2023 at the latest. Until this process is fully wrapped up, both firms will operate as separate broker-dealers and entities.

In early August, Schwab said TD Ameritrade’s thinkorswim and thinkpipes trading platforms, educational resources and tools will be part of what it offers clients of independent advisors and other investors following the integration — along with TD Ameritrade Institutional’s portfolio rebalancing solution, iRebal, for RIAs.

Meanwhile, Schwab Advisor Center is serving as the “foundation” for the new platform that is being created through the ongoing integration, Salesky said, reiterating  the goal is to offer “the best of both platforms.”

“In the interim, TDA clients will continue to benefit from the TDA platforms and, similarly, the Schwab clients will continue to benefit from  Schwab platforms,” he explained.

However, the executive added: “Eventually, we do intend to get to a single broker-dealer. That single broker-dealer will be the Schwab broker-dealer and we will have one set of platforms to support our advisor clients.”

Schwab Platform Trends

“Digital adoption continues to increase among our advisors and clients” overall, said Lauren Wilkinson, vice president of Digital Advisor Solutions, on the call.

For example, with its Move Money transfer tool, “70% of our money movements are now initiated online and certain transactions, like very time-sensitive wires, are close to 90% now initiated online,” she explained.

There are now about seven third-party technology vendors that have integrated to Schwab’s Digital Account Open onboarding capability and “six more are in development,” according to Kartik Srinivasan, head of Schwab’s third-party integrations.

Meanwhile, five vendors have already “expressed strong interest” in Schwab’s new Digital Address Change capability and are “actively developing to that integration,” he said.

After making significant investments in its general integration offerings to help advisors over the past 18 months or so, Schwab now has direct integrations with over 160 third-party products on its platform, he told reporters.

There’s also been a 76% increase in application programming interface (or API) volumes year over year as digital adoption has significantly grown during the pandemic, he noted.

What’s Coming

Vendors are “actively engaged” in 40 projects to build to Schwab’s APIs, Srinivasan added.

In what stands to be welcome news for TD advisors, Schwab expects to “bring a lot of the vendors over that TD Ameritrade is currently integrating with,” he said.

Future capabilities that Schwab plans to add include real-time status for all activities that advisors initiate across the platform, he said. That is provided now within Schwab Advisor Center, but will be added to third-party tools also, he noted.

The company also plans to add required minimum distribution data directly into third-party tools and it’s “beefing up the developer experience” overall to make it easier for developers to develop, test and build, he added.

Advisor Trends

“We’re seeing advisors … are clearly investing more in technology,” Salesky also said, noting about 50% of the 1,347 respondents to the latest Independent Advisor Outlook Study said they invested more in tech this year than they had expected. Forty-six percent said they were investing in new tech not in their original 2020 plan due to remote work, according to the study.

Many of the advisors who took part in the online survey (61%), conducted for Charles Schwab Aug. 3-16 by Logica Research, said they were adopting new tech faster during the pandemic than they had expected for 2020, he said.

The survey responses came from independent investment advisors who custody assets with Schwab, representing a total of $513 billion in assets under management, the company said.

It’s also not just advisors who are investing more time and money on tech, Salesky said, noting the “full ecosystem,” including end clients, third-party tech providers and custodians, is “recognizing this opportunity.”

“There are some challenges” that many advisors who responded to the survey cited, noting about two of every five of them are experiencing “operational complexities as they accelerate their adoption” of new tech, he said. Of those, about 50% said they were not handling that complexity as well as they would like to, he noted.

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