After experiencing what they said were only a few problems, executives at Schwab Advisor Services took a victory lap this morning while announcing that the transition of advisors formerly affiliated with TD Ameritrade to the Schwab platform was complete. Bernie Clark, head of Schwab Advisor Services, described the process as a “three-year journey” and acknowledged there would continue to be some “bumps and bruises” along the way.
According to a Schwab press release, the nation’s largest custodian for RIAs said it transitioned more than 7,000 advisory firms,, 3.6 million accounts and nearly 4 million clients to its platform following the 2020 acquisition of TD Ameritrade, which had emerged over the last two decades as a popular home for smaller RIAs. That transaction gave Schwab a market share exceeding well over 50%, according to many estimates.
It also attracted a host of new competitors to the RIA custodian space, including Goldman Sachs, Envestnet, SEI Investments and startups like Axos. Some advisors were surprised that the Schwab-TD merger was never challenged on antitrust grounds.
Schwab did say in a recent quarterly report that a number of institutional and retail clients of TD Ameritrade opted not to move to Schwab. Large RIAs typically diversify custodians but several well-placed sources in the RIA space said off-the-record that they saw few major defections away from Schwab.
However, one source added that RIAs were closely watching the balance sheet of Schwab and the financial condition of other custodians and broker-dealers in the wake of the regional banking crisis las spring. Moreover, some smaller RIAs have always sought low-cost, simpler offerings but that's not new.
“Today, we can declare victory,” said Tom Bradley, the popular former CEO of TD Ameritrade Institutional who was brought in by Schwab to assist with the transition. Fully 75 million investment positions were transitioned.
Responding to a question implying that Schwab lavished more attention on large RIAs than smaller rivals, Bradley noted that 80% of the advisors moving to Schwab had under $300 million in assets under management. All RIAs were provided with extensive opportunities to engage with Schwab, according to the executives.
Clark said the biggest challenge in managing the transition arose in the early stages. “The hardest thing was getting deep into relationships during the pandemic,” he said.
Clark acknowledged that Schwab and TD had “sold against each other” as competitors for decades so both teams had a good idea of the strengths and weaknesses of the other's offering. How well they can build on the strengths of both platforms will go a long way to determining the success of the merger.
The transition was largely complete in the view of Schwab execs, though technology and operations experts said it remains to be seen if reconcilation will go as smoothly as the rest of the transition. For his part, Clark said he hoped the experience of the last three years could provide a launching pad for enhanced services down the road.