Schwab CEO on Integrating with TD Ameritrade: ‘Tough Choices’ Ahead

By Mrinalini Krishna October 28, 2020

Combining Charles Schwab and TD Ameritrade is “not completely easy” and there are tough choices ahead, Schwab’s CEO said a day after the firm announced plans to lay off 1,000 employees.

“We’ve had to part ways with some incredible, talented people. Some tough choices, some that we’ve already made and, of course, some still to come. Unfortunately, it’s the nature of combinations like this,” Walt Bettinger said yesterday at Schwab’s Impact 2020 conference.

The job cuts, which will impact both firms and represent 3% of the combined workforce, are aimed at reducing redundancies. One day after the $26 billion deal closed on October 6, Schwab said it expects the integration of the two firms to take 18 to 36 months.

Bettinger said each decision is being weighed “based on whether it’s ultimately better for our clients or not.”

He reiterated the impact of the deal, which would account for a combined $6 trillion in client assets, 28 million brokerage accounts and five million daily average trades.

“Together, we’re going to continue breaking down barriers, eliminating trade-offs, and delivering a winning combination of low cost, great service and best-in-class technology,” he said.

Bernard Clark, head of Schwab Advisor Services, said the firms want the integration to be as paperless as possible. Advisors and industry executives observing the merger had said early on that repapering is typically among the concerns when custodians integrate.

Clark also reiterated that Schwab does not intend to impose any asset minimums or custody fees on advisors.

He clarified that TD Ameritrade’s trading platforms ThinkPipes and Thinkorswim, along with portfolio balancing tool iRebal, will be brought over to its systems. Schwab Advisor Center, its own platform, will serve as a foundation upon which capabilities of TD Ameritrade’s technologies, such as trading platforms Veo and Veo One, will be incorporated.

Tom Bradley, senior vice president at Schwab Advisor Services, said the firm will not charge for iRebal on its platform, allaying fears of smaller advisors with up to $300 million in client assets. Bradley, who focuses on those smaller advisors and is overseeing the transition of the TD Ameritrade advisors, also said the firm will ramp up communications and training for those advisors in the coming months.

Schwab is also examining the future of TD Ameritrade’s advisor referral program, AdvisorDirect, which is “top of mind” for many advisors, Clark said. Schwab’s own Advisor Network has delivered $100 billion worth of referrals to advisors since its inception in 2002, he noted.

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