Home    News & Publications    Podcast #11: Update On Schwab Acquisition Of TD Ameritrade

Podcast #11: Update On Schwab Acquisition Of TD Ameritrade

November 20, 2020

Listen to the podcast below to hear about this week’s update on:

  • Acquisition of TD Ameritrade by Charles Schwab
  • Other custodial options
  • Election results and the stock market




Hi Everyone,

I wanted to update you on the Schwab/TD Ameritrade acquisition. Schwab invited all the TD Ameritrade advisors to their annual conference – which like all conferences was held virtually. I’m going to use TDA as a short hand.

Kai, our Operations Manager, and I attended. We were surprised and favorably impressed by the quality of their technology. Apparently they have formed over 20 committees made up of Schwab and TDA personnel working together to evaluate different aspects of the acquisition. I was pleased to hear they have one on corporate culture since there is definitely a difference.

The moderators of each session addressed comments specifically to TDA advisors. If they were showing the Schwab platform, they explained how it was different than TDA. They did an excellent job saying here is where we are in the left column and here’s the next set of enhancements on the right.

Since Schwab already committed to keeping TD Ameritrade’s rebalancing software – an electronic way to review portfolios and make changes; it is an important step in the evaluation process. It enable us to continue to use the program we are used to.

As you know, Schwab hasn’t been high on my hit parade and I’ve been actively seeking a better alternative. I feel a bit like a reluctant buyer. But in all fairness, I have to say, Kai and I were very impressed with what we saw.

Alternatively, my unofficial first place candidate for a new custodian is a company called Pershing. It is owned by what had been Bank of New York combined with Mellon Bank and is referred to as BNY/Mellon. I listened to a one-hour Q & A with their head of Advisor Services. Unfortunately, I was very disappointed.

While it is too soon to assess their technological sophistication, the speaker showed something of their corporate culture that didn’t feel like a good fit with Financial Connections. They are looking for advisory companies that have plans to grow rapidly.

We enjoy the client referrals you send our way; our goal has never been to get large quickly. Brian and I prefer measured growth rather than serious advertising and potential uncontrolled growth.

The driver for Brian and I communicated to our staff has always been service. Regardless of how much money you have, we want to provide good service. So it is possible what we thought was an alternative to Schwab may not work. It is not our culture. However, it is too early to make a decision. We have at least a year before anything happens.

Moving to a different topic, I want to discuss the elections. As with the 2016 election, we had plenty of calls about changing portfolio allocations or trying to speculate how the outcome will impact investments.

One of the mutual fund families we use: Dimensional Fund Advisors had a good statement. “Shareholders invest in companies, not political parties.” When we invest for you – you are a shareholder.

According to the Capital Group which runs American Funds, from 1933 – 2019, whether the government was unified – same party in the executive and legislative branch, or Congress was split, the investment return was almost identical.

While the President and his policies will impact markets, so do actions by the Federal Reserve on interest rates, the pandemic, natural disasters, technology changes, Congressional activity and so on.

Company earnings ultimately drive the stock market. That is not to ignore the short-term volatility we may experience based on other issues. As we’ve seen recently, the market has risen quickly on the positive news about two potential vaccines.

Alternatively, it might go down as the economy slows because of the impact of the pandemic. While we can see the small stores, restaurants and companies unable to remain open in our neighborhoods, they are not companies on the stock market. Eventually, these job losses will impact the economy and the stock market.

We always have an open door to discussing your portfolio and any changes you would like to discuss. It is hard to take the long view but we’re here to help.

Now for some more pleasant news. The National Zoo in Washington, DC has a new panda. You can vote on his new name by going to their website.

I don’t know if you remember the movie The Graduate with Dustin Hoffman and Anne Bancroft. One of the funny lines was the recent graduate, Benjamin Braddocks played by Dustin at a pool party with adults. A guest is telling him of the fabulous career opportunity. He says: “One word: plastics” and walks away. Benjamin looks blank.

Well, plastics surely has been a mixed bag. It was an invention that allowed a lot of essential items and necessities to be produced and packaged but it also created problems.

Recently, two discoveries are turning plastic waste into commodities. One discovered in a joint venture with Oxford and other universities in the UK, collaborating with groups in China and Saudi Arabia. They found a way to retrieve valuable chemicals from the waste creating hydrogen and carbon, high value products for sale.

In 2016 a Japanese scientist discovered a bug that lived on plastic trash. Professor John McGeehan from the Center for Enzyme Innovation at the University of Portsmouth discovered, by accident, a synthetic way to “eat” the plastic three times as quickly as the bug.

So while we still need to worry about our recycling habits and their impact, isn’t it wonderful what human ingenuity can do.

Until next time, we hope your Thanksgiving holiday while different than previous years, still offers much to be thankful for.



Receive the Financial Connections quarterly newsletter


No Hidden Costs. No Referral Fees. No Commissions.

As a fiduciary, we put our clients' interests first. Our compensation comes exclusively from you. If we don't directly provide a particular service, we can serve as a resource for referrals to other professionals.

Download the fee schedule Download Disclosure Form ADV Parts 2 & 3