Now that Charles Schwab has closed its acquisition of TD Ameritrade, XY Planning Network will be keeping a close eye on the service it receives and the investment in technology that Schwab follows through on, according to co-founders Michael Kitces and Alan Moore.
The duo is ready to move its business elsewhere, if they feel XYPN isn’t getting the attention it deserves. But for now, they have assurances that Schwab will honor the contract TD Ameritrade established with the group.
That agreement looks different from much of the business Schwab may be used to servicing. TD Ameritrade was willing to waive minimums and provide a support team familiar with XYPN’s particular brand and niche, according to Moore. TD Ameritrade also provided “the easiest-to-integrate-with custodial platform,” he said. XYPN leadership will be watching to see if Schwab maintains it, improves it or lets it fall by the wayside.
While the collective level of assets at XYPN may not move the needle, “structurally, XY Planning Network is a very large strategic account for a custodian by RIA firm count,” said Kitces. The organization has more than 1,300 advisors and RIAs and has a presence in all 50 states, he added. “We were upwards of 10% of TD Ameritrade’s entire base of RIAs, which we know Schwab is very eager to continue to hold on to.”
XYPN members are keen to dodge strategic management teams “that are not quite sure what to do with us,” said Moore. “What we’re looking for is … servicing that ultimately isn’t the call center for all [Schwab’s] small advisors, because in Schwab’s world, they have had historically higher minimums.”
“While Schwab has committed to all advisors, each sales rep may not share that equal commitment,” he added. “We want to be sure we have a really clear and streamlined process—similar to what we had at TD.”
While XYPN is looking at “pretty much every RIA custodian you can imagine,” it is not necessarily looking for a niche custodian, said Kitces. That’s because while the demographic served by the network, which tends to skew younger and more toward those growing their savings, and the large number of RIAs in the network could be a boost for a smaller custodian, XYPN’s leadership is wary of swamping the existing service team.
“The sheer breadth of the number of advisors and clients we have means some of the smaller custodians … we would have concerns about whether they have enough service staff capacity to handle the number of advisors we would add for them,” said Kitces.
Meanwhile, XYPN is building more of its own technology, called XY Portal, and wants to find partners open to integration.
XY Portal is designed to facilitate workflows, said Kitces. With so many advisors turning to niche software, leadership at the organization wanted to build a system to sign up for new software, use services or sign up for new member benefits, all at one location. The Portal will be a feature allowing members to manage XYPN billing, download invoices, keep information up to date and update or add new accounts—a type of single-point-of-truth. The network is opening beta testing by the end of the month and the service is scheduled to be available to all members by the end of Q1 2021.