If you follow financial media at all, it is likely that you have seen news about Schwab buying TD Ameritrade.
As a reminder, in our role as an independent Registered Investment Advisor, we choose who we want to custody assets with. Almost 10 years ago, we interviewed the “Big 4” of custodians, Schwab, TD, Fidelity and Pershing and chose TD. We felt they had an edge on technology and were very open to working with other developers to continue to enhance their systems. We have already seen costs decline leading up to the announcement of this integration and are hopeful that this trend continues to the benefit of our clients. Regarding the timeline or changes that may lie ahead, please bear in mind the following:
- The deal is not final. Although Charles Schwab announced plans to buy TD Ameritrade, the deal has yet to be approved by antitrust regulators. This means it is too early to speculate about what the terms will specifically mean.
- It will take time. Pending regulatory approval, the integration of the two firms is expected to take 18 to 36 months* after the deal is closed. This means it will likely be a significant amount of time before we know what is required of this merger.
- An integration has advantages. Some analysts believe the combined firm may be able to cut costs, stream new revenue opportunities and improve the overall technology and resources.
- We will continue to update you regarding the progress of this proposed integration. Years ago, we experienced a similar situation when the platform that we were using was acquired by a division of Fidelity Investments. Initially, nothing changed but ultimately, new paperwork was required which I can honestly tell you was not a fun project for our team. I would expect that with technology today, if new agreements are needed that it will be a fairly automated process.
For now, it’s business as usual for us and for you. Aside from what happens with the integration, we will do our due diligence and see what the other custodians offer which may be of benefit to our clients and also consider a multi-custodian relationship for a broader base of services and technology to better serve you. In these regards, it will be our choice and not anything imposed on us. We will continue to update you as we see more clarity and progress in what the Schwab/TD integration may look like. Thank you for the confidence you have placed in our firm. We consider it an honor and a privilege to serve you!
Irv & The RZ Wealth Team