If TD Ameritrade’s advisor referral network is also subsumed into Schwab’s, it may also eliminate a potential source of clients and assets from advisors, creating fewer and larger winners, according to Kitces.

Some advisors, like Mike Kurz, CEO of Frisco, Texas-based OverShare Advice and Planning, believe Schwab is right to segment out smaller advisors for a lower tier of services, or to try to avoid serving them altogether. Smaller advisors not interested in growth might not have a future in the financial industry if they continue to go it alone, said Kurz.

“Regardless of the size of AUM, the one-dimensional practitioner is going to struggle when they don’t have the necessary sercice providers/vendors to fill in the gaps,” said Kurz. “If these types of practitioners are expecting the custodians to deliver a full-service offering for very little expense, then this group may feel like they are getting below-par service. I would encourage that advisor/practitioner profile to consider joining a team or connecting with one of the enterprise-type firms to provide the services they need in return for a portion of their revenue.”

Elliott believes the deal will allow Schwab to improve or enhance its service offerings for smaller RIAs. There’s been at least one sign that Schwab may place more focus on smaller advisors: Last week Schwab announced it hired former TD Ameritrade CEO Tom Bradley to head Schwab’s RIA custody business for firms with less than $100 million AUM.

The anonymous New York-based advisor, who formerly held a leadership role in a financial advisor professional organization, said that he would be looking for a new custodian ahead of the transaction.

“I’m going to be seeking out other firms as well,” he said. “I can’t imagine Schwab continuing TD Ameritrade’s service, and I’ve been extremely happy with TD. I feel bad for the consumer.”

James Kinney, an advisor with Bridgewater, N.J.-based Financial Pathways who also custodies with TD Ameritrade, said that he is considering looking elsewhere before his custodian is consumed by Schwab.

David Wilson, senior wealth manager with New York-based Watts Capital, said that he will take a wait-and-see approach  to determine if he changes custodians.

“We want to evaluate our custody relationship every year,” said Wilson. “The vast majority of our cients are on the Schwab platform. It’s something we're going to watch very closely in terms of the services they provide and their fees or potential fees. We’re just going to continue to evaluate if Schwab is the best option for our client base.”

Smaller custodians like TradePMR and Shareholder Service Group have already reported more inquiries.

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