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Industry Spotlight > Mergers and Acquisitions

Merger of Schwab, TD Ameritrade Advisor Referral Networks Begins

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What You Need to Know

  • Schwab is reducing the number of advisor firms in the two advisor referral programs to 175 from 298.
  • TD Ameritrade’s AdvisorDirect referral program is being integrated into the new Schwab Advisor Network.
  • Schwab is selecting RIAs based on matching the unique needs of affluent investors in each market, it says.

Charles Schwab has started the process of integrating the Schwab and TD Ameritrade advisor referral networks this week as part of an initiative that will result in a decrease in the number of participating RIA firms to 175 from 298, Schwab said on Wednesday.

TD Ameritrade’s AdvisorDirect (AD) referral program is being integrated into the new Schwab Advisor Network (SAN), a “single, industry-leading referral network for independent advisors,” Schwab spokesman Rob Farmer told ThinkAdvisor.

The combination of the two programs, first reported by RIA Intel on Wednesday, is “part of the continuing integration of Schwab and TD Ameritrade,” Farmer said.

The integration of the companies started after Schwab finalized its acquisition of TD Ameritrade Oct. 6.

“As with all aspects of integrating the two companies, bringing the referral networks together took careful consideration,” Schwab said at its website, introducing the new SAN.

“Each participating SAN and AD firm was reviewed with an eye toward investor need and the makeup of the combined branch network footprint,” Schwab said, explaining how it selected RIA firms for the new referral program. “Although the resulting program may look new, the focus remains the same: serving high- and ultra-high-net-worth investors in markets throughout the United States,” it said.

The referral programs for both firms have been “incredibly successful both for advisors and the investors they serve,” Schwab said. “We recognize the strong advisor interest in our respective referral networks and made their integration a priority among the important work we’re doing to combine the two companies.”

Schwab’s “goal is to deliver a single program that will foster quality investor referrals for participating advisors,” according to Nicole Bonar, SAN program director.

“We wanted the combined program to be even better than the sum of its two parts,” she explained at Schwab’s website. “It was apparent early in the process that there were more qualified firms than we could accommodate in a single program. We had to make some tough decisions.”

The new SAN will consist of about 175 advisor firms, a total that Bonar said was “based less on a number than it is on finding the right combination of firms to match the unique needs of affluent investors in each market.” Schwab’s evaluation process included “both quantitative and qualitative measures and considered everything from expertise and capabilities, to the firm’s ability to retain and work with referred investors,” according to the firm.

“Firms in the new network represent a great cross-section of expertise and experience,” according to Bonar. “They also provide a good illustration of Schwab’s ongoing belief that independent advisors are a solution for serving HNW and UHNW investors with complex financial needs and a desire for local, personalized support.”

As the referral program integration “unfolds until its anticipated completion upon final integration,” SAN and AD “will continue to operate as two separate referral programs for Schwab and TDA investors,” Schwab said. “The overall integration of the two companies remains on track along the previously shared 18- to 36-month timeline from close in October 2020.”

(Photographer: Christopher Dilts/Bloomberg)


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