TD Ameritrade’s technology stance has helped smaller advisors scale and grow their practices, said Kinney.
Some advisors were concerned that news of the acquisition came on the heels of an announcement by Schwab that advisors with less than $200 million AUM will be serviced via a call bank and a 1-800 number rather than by a dedicated relationship manager.
Yet some Schwab clients argue that the transition to a 1-800 service for smaller RIAs will not make much of a difference in how Schwab serves advisors. Bernard Kiely, founder of Morristown, N.J.-based Kiely Capital Management, has custodied his sub-$100 million RIA with Schwab since 1990.
“I don’t see not having a person to call as a problem,” said Kiely. “I’m trying to think of the last time I had a problem where I had to speak to a person. Sometimes there are questions about moving money and stuff.”
In fact, a lower-touch, higher-tech service is becoming the norm between custodians and advisors of all sizes. Fewer firms are given dedicated relationship managers, and fewer of those firms are actually using their manager.
“Most of the work we do with Schwab is already computerized now. That’s where they create their benefit,” said Kiely. “We don’t get paper statements anymore. It’s all on the internet. We can open accounts without talking to anyone, and we can move money without talking to anyone.”
But Schwab’s success at using a phone number to service smaller advisors depends on how reliable that service is, said Kiely, adding that advisors will look elsewhere if they can’t get the help they need on the phone.
Matt Elliott, principal at Rochester, Minn.-based Pulse Financial Planning, argued that Schwab’s services are already better than TD Ameritrades in many ways, especially for retail investors.
“The potential for better service at TD Ameritrade was the one silver lining that may exist within the transition for existing TD Advisors to Schwab,” said Elliott. “Schwab certainly has a better reputation on service, and I can confirm that has been my experience so far. This may not be the case if Schwab is looking to ptofit from scale and not service lower AUM advisors with the same standard that they do currently.”
Moving to Schwab would also enable TD Ameritrade-custodied advisors to offer value-add services to their clients, such as donor-advised funds and international ATMs, without having to access a third-party company, said Elliott.