Last-Minute Steps for TD Advisors as Schwab Integration Closes In

With little time to go before TD Ameritrade advisors and their clients’ accounts move to the Charles Schwab platform, F2 Strategy CEO Doug Fritz told ThinkAdvisor that, although it’s late in the game, there are still some steps that advisors can take to prepare for the integration.

During an online interview on Tuesday, Fritz also discussed why he decided it was time to hand over the role of president to someone from outside the wealth management technology services firm.

Other topics he discussed included F2’s growth plan and its recent relocation from San Francisco to Chicago and acquisition of consulting and services provider Oakbrook Solutions.

Below are Fritz’s responses to ThinkAdvisor questions during the interview, edited for length.

THINKADVISOR: At this point, is there anything left that Schwab or TD Ameritrade advisors should be doing ahead of the Labor Day weekend integration?

DOUG FRITZ: It’s not that it’s too late but we’ve been signaling since the beginning of this year … trying to get out in the press, the media, as much as possible, all of the many steps that responsible firms should have been doing up to this point around confirming with your other vendors that they’re ready to make the switch.

People are thinking it’s just a Schwab and a TD thing. But if [you've been] using Orion or Black Diamond or another software vendor to plug into TD … you’ve got to get confirmation that’s [going to] work.

And, to the best of our knowledge and all of our clients, all of F2′s clients that have TD as a custodian, we’ve covered that. But we’ve been trying to jump up and down and just point to folks in the industry and say, “Hey, you need to do your homework here; you need to get ready for the switch.”

There’s client communication that has to happen … I know Schwab has a bad reputation. People love to knock on Schwab but, frankly, Schwab’s done a pretty good job in at least publishing and putting out the content that their clients need to pay attention to. Our estimation is that there’s a significant percentage of the TD clients that haven’t paid attention to that.

How do you think the integration will go and why?

We’re not predicting any kind of major hiccup because Schwab is staffing it well. It’s well organized. We know the machinery of the account conversions are going to go as well as they can go. There will always be hiccups and bumps. You can’t have a merger of this size and a conversion without some problems.

But, from everything we’ve seen, Schwab’s done all the right stuff up until now. That doesn’t mean they’re not going to have a bad day over the Labor Day weekend. But they’ve done the right stuff.

We’re worried that people haven’t been paying enough attention to it and that it’s going to make Schwab look bad. But really you should’ve done your homework.

So, at this point, [a little over] a week before the conversion, if you are a TD client, we’ll keep saying it: Know who your account rep is. Know who you’re going to talk to on Tuesday… Call them before that [so] they know who the hell you are.

Ask them: “What should I have done?”… Review the documentation that’s sent to you by Schwab. Make sure that you’ve checked all the boxes and you’ve double-, triple-checked that.

Make sure that your team is aware. Make sure that, if things go bump in the night, like if your system or your accounts don’t load, if you see a problem, if you see an issue, that you know who to call in those cases. The wrong time to prepare for a problem is when you’re in the middle of the problem.

Just have your house in order before that happens. And that’s our hope: that people have done that work and that they’ve communicated to their clients that it’s happening. That they know that on Tuesday, when they all get back to the office, they know what’s going to change. That they know that they’re going to be sending things to a different place.

Is there anything that the advisor should be worried about at this point with the integration over Labor Day weekend?

Know who to call.

There’s a concept that we use called a pre-mortem. …

Think about the conversion. Sit with your top two to five executive team members … and think, “What could go wrong? How would we know it went wrong? And what would we do about it?” And have the top five answers.

If they haven’t read the documentation, then get off your butt and read it through. Make sure someone in your organization is accountable for it, [that] you’ve got someone deputized to know all the ins and outs of the details … Make sure that information is documented somewhere just in case that person’s out sick or something terrible happens.

Schwab recently talked about the attrition of some retail and advisory clients assets during the integration. What’s your take on the attrition that it’s seeing? Was it to be expected?

I’m surprised we haven’t seen more… I thought the fact that we haven’t seen more attrition, especially given that TD got acquired by Schwab [and] the philosophical and just like almost religious differences in terms of those two firms.

The fact that we’ve only seen a little bit tells us two things. One, there isn’t such a competitive offering outside of TD and Schwab that someone would flock to it. And, two, that the cost of changing, [in terms of] the labor, client experience, risk costs of switching custodians is so high.