On November 25, 2019, The Charles Schwab Corporation announced their acquisition of TD Ameritrade Holding Corporation in an all-stock transaction originally estimated at $26 billion. The deal was initially a surprise to many investors and even Registered Investment Advisors (RIA) that use the Schwab and TD Ameritrade advisor platforms. However, after doing some research, the deal started to make a lot of sense. Schwab and TD Ameritrade have been competitors for over four decades as “alternatives to traditional Wall Street brokerages”. Both companies serve “do-it-yourself” investors, as well as RIAs. Their missions align to empower both the retail investor and the independent financial advisor to ultimately help people reach their financial goals. Both companies have been leaders in reducing costs for the typical investor by eliminating commissions on equity trading (see our past blog “Commission-Free Trading: Is It a Free Lunch?”). Not long after slashing trading commissions on equity trades, the acquisition was announced. Both firms believe that combining firms will enhance the client experience and further scale operating costs.

On October 6, 2020, the deal was closed for $22 billion.

Why did WCFA add Schwab as a custodian in May?

As we wrote back in May, we believe that the Schwab/TD Ameritrade combined company will offer one of the most complete offerings for our clients. Shortly after the announcement of the merger, Walkner Condon added the Schwab platform to our list of custodians. At the time, we discussed what we thought was the best way to hit the ground running when the merger occurs, and that was to familiarize ourselves with the platform prior to the transition. Additionally, it has offered us the ability to help clients with Schwab accounts that they would like us to manage without having to transfer assets over to another custodian. Moreover, many 401k plans offer a self-directed option with Schwab, so this may also open up investment opportunities for our clients without being required to use their preselected investment lineup. Many clients’ assets, particularly in our International Advisory business, are already custodied at Schwab.

How does this affect existing clients? Do I need to do anything?

The short answer is no. Both Schwab and TD Ameritrade sent emails to their advisor partners (including Walkner Condon) stating that it is “Business as Usual”. Given the size of Schwab and TD Ameritrade, the transition is expected to take between 18-36 months. The advisor platforms, Schwab Advisor Services and TD Ameritrade Institutional, will remain separate custodians until the transition is complete. For clients, this means that if their assets are at TD Ameritrade, they will continue to use AdvisorClient.com to access their accounts, download statements, etc. until the transition is complete. Similarly, for clients with assets at Schwab, they will continue to use client.schwab.com. We will share updates with our clients as we continue to learn more over the coming months and years.

What else do clients need to know?

Clients are probably wondering how their resources, tools, and pricing will be affected by the Schwab/TD Ameritrade merger. Here is a quick response to some of these FAQs:

Am I able to open new accounts on the platform that I’m currently using?

Yes. If your accounts are at TD Ameritrade, you can continue to open new accounts on the platform (same with Schwab).

How will the technology and resources I access online change?

You won’t notice any changes in the near future. At some point, there will be some consolidation of the Schwab and TD Ameritrade platforms, and we will communicate those changes to you when we know more. Again, that is estimated to be 18-36 months from now.

Another note on technology:

The beauty of being an independent firm is that we’re able to constantly reevaluate the tools and technology that we use and procure for our clients. Tools such as RightCapital, Riskalyze, Blueleaf, MoneyGuidePro, etc. will continue to be used as we believe they enhance the client experience. That said, if we find a better and more efficient tool for our clients, we will explore those tools with an open mind. Schwab and TD Ameritrade have never dictated the use of these supplementary tools that our firm has chosen.

Does my pricing change?

No. Your investment advisory fee indicated by the fee schedule in your Walkner Condon Client Agreement stays the same.

What happens to my accounts when the transition is completed?

Schwab has indicated that there will be a “bulk conversion” when the transition is completed in 18-36 months. They have stated that they intend to accomplish this with no interruption to clients’ account history, no new client account paperwork, and no new transfer paperwork.

What is being done to protect my assets and personal information?

Both Schwab and TD Ameritrade have earned their clients’ trust for many decades by implementing many safeguards to keep their clients’ information secure. Protecting information will continue to be a priority during the transition. Designing and testing security procedures is of utmost importance.

We believe that the combined Schwab / TD Ameritrade entity will continue to make investing and financial planning more accessible, allow our advisors to utilize modern tools & technology that will enhance the client experience, and allow greater flexibility of investments & services to help people meet their financial goals. Please be on the lookout for additional communication from us, as well as from Schwab and TD Ameritrade. Please reach out to your advisor for any questions that you may have.