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Industry Spotlight > Mergers and Acquisitions

Schwab, TD Ameritrade 'Aggressively' Hiring Service Staff After Advisor Complaints

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What You Need to Know

  • The firms have laid off more than 1,200 employees since the TD Ameritrade purchase, but zero on the service side, Tom Bradley says.
  • Schwab has significantly improved the client service experience since the start of 2021, it says.
  • Tens of millions of dollars are being invested in the Schwab Advisor Center platform.

There is “tremendous progress” being made with the integration of Charles Schwab and TD Ameritrade, and the companies are “aggressively” hiring advisor service staff to keep up with the heavy trading volumes seen in recent months, according to Tom Bradley, a senior vice president at Schwab and head of TD Ameritrade integration.

The combined company has eliminated 1,200 jobs since Schwab announced the finalization of its acquisition of TD Ameritrade on Oct. 6. The job cuts were part of “our continuing efforts to reduce overlapping or redundant roles across the two firms,” according to Schwab.

However, “there have been zero layoffs on the service side” of the advisor custody business, Bradley said Tuesday during a conference call with reporters.

The additional staff that Schwab has hired helped Schwab Advisor Services to “dramatically improve the wait times” that some clients had experienced and complained about a few months back, he said in response to a ThinkAdvisor question.

“We’re much closer to the levels that we believe our clients deserve,” he said, explaining that the company experienced heavy trading volumes that “we didn’t anticipate” at the end of 2020 and the start of 2021. Although peaks and valleys happen often in the sector, the peaks tend to “come out of nowhere,” he noted.

But “we were able to adjust very quickly and we’re very happy that our service experience is back closer to normal levels — at least normal for tax season” when there tend to be higher volumes, he pointed out.

Last year, “service delivery to clients was uneven at best and disappointing to us as well as clients at times across the company,” Walt Bettinger, Schwab CEO and president, said during the firm’s Winter Business Update webcast earlier this year. “Frankly, the volumes overwhelmed even our most aggressive projections,” he said at the time.

“We have definitely seen stabilization and improvement on what we experienced late last year” across the company, Schwab spokesman Rob Farmer told ThinkAdvisor on Tuesday.

Integration Update

“We’re in a phase right now where essentially all the work is on our side [and] it’s primarily business as usual for independent investment advisors,” Bradley told reporters. “We’re keeping our finger on the pulse of the advisors in a variety of ways.”

For example, Schwab surveyed TD Ameritrade advisors and received about 1,600 responses. The advisors’ “feedback has been very consistent since we announced the deal” to merge the companies, Bradley said.

“They have really three top concerns,” he noted: “Will there be any repapering of my client accounts, number one. Number two, what will the end technology platform be or look like? And number three, do I get to keep my service team?”

Schwab’s objectives remain “to make this conversion as seamless as possible for independent advisors and their clients, and we intend to take these two great companies and… combine them to make something that is even better,” he said.

So far, it does not look as if new signatures on any documents are required to switch clients over to Schwab from TD Ameritrade. “For the most part, it looks like we’re in the no-repapering zone, which advisors are quite pleased with,” Bradley said.

Regarding services teams, however, “we’re not making any guarantees whether an advisor will keep their same service team or not,” he said.

Schwab, however, is keeping two TD Ameritrade service locations. One in San Diego that “houses approximately half of the service staff of TD Ameritrade” will remain open “primarily because we want to retain the talent there,” Bradley said.

The other locations is “a couple of miles up the road from our new headquarters,” in Westlake, Texas, he noted. “We haven’t made a final decision on that specific real estate but because the locations are so close together we anticipate that we’ll be able to retain a lot of that great talent” from TD Ameritrade there, even if the facility itself is shut down, he said.

Through the integration process, “we really, truly anticipate that there will be very little disruption — that’s the goal — around how we service advisors,” he pointed out.

A Major Investment in Schwab Advisor Center

On the platform side, it was previously announced that “Schwab platforms will be the default unless there was a material advantage on the TD Ameritrade side,” Bradley reminded reporters.

Schwab also already announced that TD Ameritrade’s iRebal portfolio rebalancing system and thinkpipes advisor trading system will be integrated into Schwab Advisor Center (SAC), which offers popular features including Account Open and Move Money, he noted.

Schwab is “investing tens of millions of dollars into our SAC platform to significantly advance the digital capabilities to make it incredibly smooth and seamless for advisors and their clients to do business with us,” he said.

Overall, “we intend to take” the Schwab and TD Ameritrade systems, “combine them together, take pieces from” TD Ameritrade’s Veo platform and “either rewrite them into SAC or port them into SAC to create something that is truly an incredible platform and that will absolutely wow the advisors and clients,” he said.

The conversion will likely happen “on a weekend or maybe a couple of weekends” and is still on track to happen 18-36 months from when the deal closed onOct. 6, he said.

Schwab also just created an integration central website for the combined firm,

The TD Ameritrade Side

TD Ameritrade is making sure that its advisors are “prepared for the conversion, so we’re building out a very robust onboarding and educational program for every advisor,” according to John Tovar, managing director of Institutional Wealth Management Services at TD Ameritrade Institutional.

As part of that initiative, “we’re going to give access to the Schwab platforms prior to conversion so that the advisors at TD can start to get familiar with the Schwab technology,” he told reporters.

Until the integration is finalized, he said, “we’re going to continue to operate as two separate broker-dealers” and new TD Ameritrade accounts will continue to be opened by advisors “up until we’re close to the actual conversion date.”