If Charles Schwab and TD Ameritrade were like two worlds colliding, the epic impact has also caused a temblor in the advisor technology world. Despite the talk of synergies, the merger will cause some beloved tech offerings to go extinct, and rival custodians are now looking to lure possibly unhappy RIAs away from the megafirm.
Some very popular advisor technology will survive the deal—including TD Ameritrade’s iRebal and Thinkpipes. But the popular Veo One advisor platform will go dark as Schwab favors its own Advisor Center, says Andrew Salesky, managing director of Schwab Digital Advisor Solutions.
“We are taking the great features of Veo One, the ones we heard that we needed to retain and built into Schwab Advisor Center,” he says. “Our challenge is that we have two strong custodians with great digital capabilities, with fans of both Veo One and Schwab Advisor Center. Our challenge, then, is really how do we bring those platforms together in a way that we can keep the best of both in one platform. That’s our objective, not just keeping Schwab Advisor Center or Veo One, but creating a combination of their capabilities.”
Schwab has taken a cautious approach to mixing platforms, he says. The firm originally announced that they would take 18 to 36 months to consolidate, but the firm is now more likely to take at least 30, he says, and the end clients won’t come on board to the new model until “mid-to-late 2023.”
Some advisors aren’t waiting to see how things end up; instead, they’re looking elsewhere for custody and clearing services, an Apex Clearing spokesperson says.
“We have seen a dramatic increase of advisor inquiries who were long-standing TD Ameritrade clients,” says the Apex rep. “The advisors state their desire to create a new digital offering and costs as major drivers in exploring new custodial options.”
Many industry watchdogs, including Michael Kitces, expressed concern at the loss of Veo One, noting that TD Ameritrade played a key role in working with third-party technology providers, collaborating with small and large RIAs to build out technology and creating an open environment where innovation could thrive.
Salesky says Schwab is committed to building out a vast ecosystem of third-party technology partners as well, using legacy TD Ameritrade resources and its own growing network. “I see a third-party ecosystem that continues to be active and ongoing, and I see more investment interest in building that third-party ecosystem,” he says. “I think quite a bit of innovation will happen, and advisors will benefit from that. I think we will actively participate in that, enable that innovation and support it and also ensure that our advisors can take full advantage of it. We take it seriously, and maintaining these collaborations has become job No. 1.”
Evan LaHuta, managing director and head of client wealth solutions at BNY Mellon’s Pershing Advisor Solutions, says the custodians that can help advisors keep their favorite third-party applications on their platforms will be able to attract and retain RIAs who feel orphaned by the merger. “The disruption in the marketplace has created tons of opportunity for us,” LaHuta says. “Most advisors are interested in maintaining that flexible kind of platform, so we’re continuing forward with that strategy, and any firm that wants to come down that path with us, we’re happy to work with. There are opportunities out there based off of the flexible approach, and we’re happy to step in.”
Schwab is also in the process of beefing up its Schwab Advisor Center with new application programming interfaces (APIs), digital account opening and onboarding, status updates and a technology adoption platform that allows advisors to benchmark their use of technology against peers at the custodian, Salesky says. “We now have over 13,000 advisors on our platform, and we have more data related to advisors than probably anyone else.”