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Schwab Closes Acquisition of TD Ameritrade Amid Multitude of Changes

Advisors should expect changes in tech and personnel, as well as a new Texas headquarters, as the two firms begin integrating.

Charles Schwab officially closes its acquisition of TD Ameritrade on Tuesday, and now embarks on a process of integration that could last three years. When the two financial services firms first announced the deal their combined assets tallied roughly $5 trillion. That has since grown to approximately $6 trillion across 28 million brokerage accounts, according to Schwab, providing scale as free trades erode commission revenue that brokerages once relied upon. The $26 billion intended acquisition, an all-stock transaction now valued at $22 billion, was first announced in November 2019 with shareholders and regulators clearing the deal to proceed in June 2020.

Schwab has already selected certain TD Ameritrade technology offerings for survival, including thinkorswim, thinkpipes and iRebal, and has publicly committed to bringing those tools into the combined firm. Schwab is the acquirer, however, and advisors have been told that “Schwab systems [will] be the platforms of choice,” according to a February 2020 business update by Schwab COO Joe Martinetto.

For advisors wondering what’s ahead, the two firms’ competing visions for open-architecture technology platforms remains uncertain. “At this time, there are no further platform decisions to announce,” said Joe Giannone, TD Ameritrade spokesperson, when asked what will happen to Veo One. “The marketplace will be kept informed as plans take shape and the integration process unfolds.”

"We will be able to share more detail as we have it following the close of the deal," said Rob Farmer, spokesperson for Schwab. "As we’ve stated, the full integration is expected to take between 18 and 36 months."

As of February 2020, Schwab executives weren’t planning to jettison Veo One, according to Bernie Clarke, EVP and the head of Schwab Advisor Services. But even if the product survived the integration, it likely wouldn’t be called Veo One, he said. The “look and feel” of the tech platform “may look more similar [for] the advisors on Schwab’s platform,” he said at the time.

Even in the midst of the acquisition, TD Ameritrade Institutional continued developing and launching products. Over the summer, TDAI introduced a service to connect buying and selling firms to one another, virtually, called RIAConnect. The service is included in the cost of custody for advisors using TD Ameritrade Institutional.

But even while it was launching new products, TD Ameritrade has seen an exodus of talent. In July, Dani Fava, the former director of institutional innovation at TDAI, left for Envestnet. Next, Skip Schweiss, former president of TD Ameritrade Trust Company and 2020 FPA president-elect, left the firm. Shortly after, Scott Belous, former managing director of digital experience for TD Ameritrade’s retail brokerage left to join LPL Financial.

To help assuage fears that smaller advisors might receive subpar service at Schwab, the firm hired Tom Bradley, TD Ameritrade’s former president of retail and institutional businesses. When his hiring was announced in December, Schwab stated he was being tasked with integrating the firms’ custody businesses. Bradley left TD Ameritrade in 2017.

However, the cancelation of TD Ameritrade's annual advisor conference in 2021 has been confirmed. "TD Ameritrade made the decision not to host National LINC in January," said Giannone, citing the pandemic's impact on large in-person events and travel. 

Amid all the questions of events, technology and service—and the changes in personnel—advisors will also need to familiarize themselves with new geography. The newly merged corporation will be headquartered out of Westlake, Texas. Prior to the acquisition, Schwab was headquartered in San Francisco, while TD Ameritrade’s flagship was in Omaha, Neb.

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