By Haddon Libby
In late November 2019, Schwab & Co. acquired TD Ameritrade from TD Bank (Toronto-Dominion) for $26 billion. The combination occurred as stock trading fees fell to zero causing a massive hole in TD Ameritrade’s revenue stream. As Schwab had a more robust assortment of revenue streams from fee generating businesses, it could benefit greatly from the economies of scale that the acquisition would create. The combination created a trading behemoth with more than 34 million accounts, 2.4 million retirement plan participants, nearly $2 billion in banking accounts, and more than $7.7 trillion in client assets. The combination means that more than 70% of Independent Registered Investment Advisors (like Winslow Drake) work with Schwab. Virtually all RIAs that perform to the fiduciary standard of care in their businesses will now work with Schwab.
Over the Labor Day weekend, most clients of TD Ameritrade will have their accounts converted to the Schwab platform. A smaller group converted over Memorial Day weekend.
If you have an Independent Investment Advisor, you will be in a grouping known as SchwabAlliance. If you self-manage or use a Schwab branch, you will be part of Schwab’s retail platform. Either way, both groups of clients will be working from the same platform. This simplification makes the overall experience much better for most.
If a TD Ameritrade client wants to see his/her accounts on the Tuesday after Labor Day, a user ID will be required. Those with investment advisors should go to SchwabAlliance.com while retail customers can go to Schwab.com. If you have accounts on both platforms or are unsure, enter either site and your account number will direct you to the correct site. For those using Smartphones, download the Schwab Mobile app.
Whether you are doing this by computer or SmartPhone, register as a new user. If you are a TD Ameritrade client who had accounts at Schwab, your existing user ID should work. Either way, go online and make sure your views show all accounts. This will most likely include closed accounts as your account histories are being transferred as well. Who knows, you may find a long, dormant account with a few dollars in it!
On Day One (aka September 5th) as access goes live, users should be impressed. New features will include the ability to make deposits, connect with Quicken and use biometrics like Face ID or a fingerprint reader. This level of security proves to be a great convenience as well as a password that is hard to steal. Rather than signing papers or using DocuSign, you can now view and approve items like wires via the message tab.
Views will be customizable to the user’s choice. Accounts can be renamed for client views and grouped in virtually any way that the user desires. You can also add accounts to your online access held at other firms (e.g. Fidelity).
One of the more interesting features is in how couples share account views with each other. To share accounts, each spouse will need a user ID. Each can then invite their partner to view their accounts. The user can also grant access to a CPA or other interested party. For those who do not want to share an account with a spouse or CPA, customization tabs will allow you to exclude those accounts from a shared view. The same goes for corporate accounts or a non-profit organization where you might be a signor and precluded from sharing confidential information.
Those with bank accounts attached to investment accounts should have received a new debit card by now. If you have check writing privileges, expect to receive new checks in the mail. You can continue to your existing check stock until replacements are received.
While change can be scary, Schwab has done a great job at incorporating the best of both firms into what has to be the best platform for investment management.
Haddon Libby is the Founder and Chief Investment Officer of Winslow Drake, a State-Registered Investment Advisor that performs to the Fiduciary Standard of Care. We also use TD Ameritrade Institutional and will be converting accounts to the Schwab platform.