Like the executives of so many advisor firms who custody assets at TD Ameritrade, David B. Armstrong, the outspoken president and co-founder of Monument Wealth Management, wants to know what’s in the Charles Schwab acquisition for him.

While the deal closed Oct. 6, Bernie Clark, Schwab’s executive vice president of Advisor Services, admitted that decisions regarding transitioning TD Ameritrade’s clients, technology and platforms over to Schwab have yet to be made. So Armstrong, who built his Alexandria, Va.-based firm to $325 million since 2008—all of it custodied at TD Ameritrade—will be waiting and watching with thousands of other advisors to see if they can live with the changes.

Many TD Ameritrade executives, some who have longstanding relationships with their RIA clients, are expected to leave the custodians. The list includes Tom Nally, the popular CEO of TD's Institutional unit.

“Fundamentally, any time you reduce the choice to the consumer—and I’m their consumer—it’s never good for the consumer. So as choices are reduced, it creates a lack of choice for us and as fiduciaries we have to act in the best interests of our clients to ensure we are using the best custodian for them,” Armstrong told Financial Advisor magazine.

“Right now, we are 100% at TD Institutional. So as for the bells and whistles we like, I think that is going to remain to be seen if they remain. I am going to operate under the common sense principal that if there is something that is really good at TD Institutional, Schwab will be smart enough to keep it. We will operate under that assumption until we hear otherwise,” Armstrong said.

Armstrong's wait-and-see attitude is shared by many of the more than 5,000 RIAs affiliated with TD. Other major custodians, including Fidelity, Pershing Advisor Solutions, Raymond James Financial Services and LPL Financial, are poised to to offer inducements to RIAs who encounter problems in the upcoming transition. While TD's retail investor base was the primary motivator behind Schwab's acquisition, it is believed that Schwab also is seeking to solidify its dominance in the custodial business.

Armstrong, a former Merrill Lynch advisor who said he grew his firm some 12% in 2020 despite the Covid-mandated remote work environment and the second quarter market meltdown, said he would be disappointed to see Schwab not onboard hallmark TD Ameritrade technology such its VEO One technology platform and workstation and iRebal Portfolio Rebalancing program. Schwab has indicated it will maintain iRebal, a highly popular TD-owned fintech app.

“If the technology is not integrated or is wholesale thrown into the trash can, that would be a catalyst to look at other options. I don’t think that will happen any time soon so we’re going to wait and see,” Armstrong said.

The RIA president, whose average client onboards about $2.5 million with the firm, said his perspective on custodians has changed greatly in the past couple of years. “As my business matured, we have become less and less reliant on custodians to do anything besides just be a custodian, so I have not found a lot of value proposition in any of [the] non-technology-offerings, such as asset management," he said. "Conferences are conferences. I wouldn’t choose one over another because their conferences are good.”

What would sway his decision about whether or not to stay with Schwab is how the custodian’s decisions impact his ability to do business, he said.

“This is going to sound a little pejorative, but custodians are like cell phone providers. They either are or aren’t serving me effectively. Are they helping or hurting my ability to be efficient and effective? The minute my calls get dropped or don’t go through, I’ll need to find a new provider,” Armstrong said.

While there are definitive switching costs associated with changing custodians, “I think there is a tipping point regarding what you’ll tolerate and not tolerate when it comes to doing the best job for your clients,” he said.

Has Schwab reached out to Armstrong to get his input or offer assurances?

“I haven’t heard from anyone from Schwab, but the deal just recently closed, so I don’t view it as a negative. They may have thought it was inappropriate before. I assume they’ll reach out to learn about my business and articulate their value proposition. But TD has reached out to us a lot, just to keep the lines of communication open. I have been very happy about how they’ve kept in touch with us,” he said.

When Schwab does call Armstrong they’ll learn that Monument added a number of wealthy clients this year, 100% of them because of the firm’s online presence. “We haven’t met one of our new clients this year face to face. They found us by coming across our social media posts, blogs and videos, especially those talking about the March market crash. Almost 100% of our client growth came in during that seven- to eight-week period of turbulence during the second quarter,” he said.

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