The 14,000 independent registered investment advisors who custody with either Schwab Advisor Services or TD Ameritrade Institutional will now have access to more than 800 institutional mutual funds without transaction fees.
The expanded offerings in the “institutional no transaction fee” category (INTF), which have been over a year in the making, are managed by 15 third-party asset managers with high name-recognition among advisors’ clients, said Jalina Kerr, director of client experience for Schwab Advisor Services.
“The advisors have a value proposition steeped in the portfolios they can construct for their clients. And as ETFs have continued to grow in popularity as a low-cost solution, we want to make sure we’re at parity with our mutual fund offerings as well,” she said.
The added roster of asset managers includes BlackRock, Cohen & Steers, Diamond Hill, Franklin Templeton, First Eagle, Guggenheim, Goldman Sachs, Invesco, Janus, Legg Mason, Lord Abbett, Nuveen and Principal Funds. The group represents more than 800 institutional funds.
“We chose these funds in particular because we looked across the breadth of providers that independent advisors were using and we saw a lot of continuity, both on the Schwab and the TDA platforms,” Kerr said. “We definitely wanted to go after the ones advisors were using, were comfortable with, and felt good about as best-in-class solutions.”
The funds were also chosen for their low costs, given what clients expect in investment choices and selection today, she continued. The negotiations with the asset managers took time, as did ensuring the Schwab and TD Ameritrade systems were upgraded for the funds’ tickers.
(While Schwab acquired TD Ameritrade in October 2020, full integration is still ongoing and the broker-dealer platforms will remain separate until sometime next year.)
“There’s a lot of operational details that go into getting a launch like this off the ground,” Kerr said. “The preferred provider relationship with T. Rowe Price last December was our initial foray into INTF, and even before that was announced we were already working on the expansion.”
Kerr said Schwab is working on more enhancements to its advisor services, to be released next year.
“We know passive investing continues to be king with a lot of our clients,” she said. “We’re looking across the entire product suite to make sure we’re competitive on all fronts.”