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Schwab CEO Walt Bettinger, left, and Schwab Advisor Services chief Bernie Clark

Schwab Execs Affirm Promises, Acknowledge Uncertainty

Advisors want to know what's happening as Charles Schwab integrates its TD Ameritrade acquisition. Walt Bettinger and Bernie Clark ask for patience.

Marking its 30th anniversary of the event, Charles Schwab began its first virtual IMPACT conference on Tuesday. The approximately 2,100 registered attendees, including a number of advisors from TD Ameritrade Institutional, began their day with a prerecorded marketing video from Charles “Chuck” Schwab and a wide-ranging video chat between CEO Walt Bettinger and Bernie Clark, head of Schwab Advisor Services.

Bettinger and Clark reiterated the company’s message of serving advisors of all sizes and with a minimum of fees. The duo also described some of what’s expected in the near future, including more customization and direct indexing.

But in many cases, details were scarce. With an integration timeline that could extend years into the future, Schwab executives are ad-libbing at times, said Clark.

“Everybody is anxiously awaiting information,” Clark said.

“We’re trying to create as much transparency, quite honestly, as we know,” he added, acknowledging that there are some aspects of the integration “that we don’t quite know yet.”

From the standpoint of fees and technology, Clark pointed to promises Schwab has been making throughout the process of its acquisition of TD Ameritrade.

“We don’t have a minimum asset under management. We’re not going to,” he said. “We’re not going to have fees; no custody fees are planned in the future, for sure.”

Schwab Advisor Center will be the “foundation” for the amalgamation of Schwab and TD Ameritrade technology, said Clark. “We will grow the capabilities from both Veo and Veo One on top of that platform,” he said. “We recognize Veo has some fantastic capabilities and over time we’ll continue to incorporate those.”

Plans are also progressing for a combined referral network. “Ultimately, we will find a way toward a retail-driven program that has reach and power, and aligns with the needs of investors,” said Clark.

While Schwab executives have described plans, their most visible actions have been the pink slips given to TD Ameritrade talent, including high-ranking TDAI executives laid off on Monday. Even before the acquisition closed, resignations at TD Ameritrade echoed across the industry.

While Bettinger and Clark recognized the contributions of personnel from TD Ameritrade, they’re confident in their vision for the future. A big part of that vision is scale.

As competition heats up, with firms like Goldman Sachs buying Folio Financial or Morgan Stanley buying E*Trade, scale matters, said Bettinger.

“Brand loyalty alone is not going to assure success,” he said. “[Consumers] are more willing than ever to change the provider that they work with in search of a better experience.”

Part of that experience will be direct indexing, he said.

A push in the direction of direct indexing, beyond serving investors interested in impact and ESG portfolios, was the rationale behind Schwab buying Motif Investing earlier this year, he said.

“Direct indexing makes a lot of sense for many investors,” Bettinger said. “We have to use technology to make things more efficient.”

Bettinger is also confident that Schwab is on the right side of the equation that compares growth in the broker/dealer world with that of the independent RIA business.

“There are so many brokers moving to the independent model and of course no one’s going the other way,” he said. “There’s no independent, fee-only RIA headed to the brokerage world.”

The morning’s keynote concluded with a look at the future—of Schwab’s commercial real estate and office space. Schwab’s employees had done a good job of being flexible as the pandemic impacted its business in 2020, but he said he didn’t expect “major changes in our real estate strategy.”

“It’s too soon at this point in time to talk about drastic, wide-ranging sweeping changes, and abandon our historic approach to real estate,” he concluded. “It’s best to focus on safety, health, serving our clients the best that we can and looking forward to brighter days in the future.”

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