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Podcast #10: Schwab Acquisition of TD Ameritrade

October 14, 2020

Listen to the podcast below to hear about this week’s update about the Charles Schwab acquisition of TD Ameritrade.




Hi everyone.

A number of you contacted me regarding the October 6th announcement of the purchase of TD Ameritrade by Schwab and what it means to you.

You may recall that October 2019 was the initial announcement of the purchase. It has taken a year to go through the regulatory process for approval.

I have some definite opinions about this acquisition but I want to offer some perspective so you know the lens I am looking through.

In my corporate career, I went through two acquisitions plus deregulations in banking and telecommunication.

The first acquisition was a company I worked for called SP Communications. The SP stood for Southern Pacific Railroad. The company was formed when the breakup of AT&T also known as Ma Bell occurred in 1982 and alternate carriers were established. SP Communications was  purchased by GTE and became known as Sprint. GTE kept the Sprint executives in place to ease the Acquisition into GTE. It went smoothly.

The second was the purchase of San Francisco based Crocker Bank by Wells Fargo in 1986. This time I worked for Wells Fargo so was with the acquiring company. They sent us to seminars to learn how the Crocker employees might feel being acquired. Unfortunately, the Crocker executives didn’t treat their employees as well preparing them for the transition.

So I’ve seen acquisitions from multiple points of view.

I have two major concerns about the acquisition. The first is the difference in corporate culture.

I have been part of the TD Ameritrade President’s Council for 17 years and have an understanding of their culture and how they treat their employees and our clients. It is not lip service on their part.

On the other hand, I have heard just the opposite about Schwab. Advisors complain about Schwab contacting their clients without their permission, competing with the advisor and a lack of flexibility.

On October 9th, 3 days after the sale was approved, Tom Nally, President of TD Ameritrade Institutional and 7 other executives were let go from TD Ameritrade.

I find this very short sighted on Schwab’s part. Tom had a grasp of the advisors using the TD Ameritrade platform. He could have been an excellent conduit to provide feedback and concerns from advisors to Schwab. I believe it would have eased the transition to Schwab. Tom had been with TDA for 27 years. That is a lot of institutional knowledge leaving. As it is now, I’m hearing many advisors will be looking for an alternative to Schwab.

My second concern is technology.  Within the custodial industry, TD Ameritrade is considered the leader in technology. TDA’s approach was one of inclusion. They would interface with any software that passed their vetting process so an advisor could select the software that worked best for her firm. Alternatively, Schwab’s approach was here is what we offer, take your pick. If we don’t have it, too bad.

I would hope Schwab would take the technology approach of TD Ameritrade but it is too early to tell.

Of course the other custodians are aware that there is new business to be found and are gearing up to try and persuade TD Ameritrade advisors to come to them.

Schwab believes it will take 18-36 months for the transition to take place. So, at the moment, there is nothing to be done.

In 2021, Financial Connections will contact the other custodians to analyze their services and technologies. Our goal is to find a company with a high service level, a corporate culture that is client and employee centric and offers the technology Financial Connections requires.

If such a company exists, it also has to be worth the time and effort required to move your accounts to a new custodian. While this is much easier given such programs as DocuSign, it is still an effort for everyone.

Financial Connections has done this once before when everything was paper. In 2003, we left Schwab for TD Ameritrade. We left Schwab because of complaints from clients about service.

We will keep you apprised of our progress.

Now for some good or at least interesting news.

Remember when you were told to eat your spinach because it is good for you? According to American University’s Department of Chemistry, when spinach is converted into carbon nanosheets, it can act as a catalyst in fuel cells and metal-air batteries. Who knew!

We’ve all heard the phrase Tasmanian Devil. Apparently, they have made a comeback in Australia after 3,000 years. Twenty-six were released into a large sanctuary.

So until next time, please stay safe and healthy. Don’t hesitate to contact us if we can be of assistance.


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