What Schwab has to say about Veo, TD and referral networks

With its acquisition of TD Ameritrade officially closed, Charles Schwab has begun laying out a roadmap for the future of its former rival’s advisor division.

The decisions Schwab makes could affect the technology, custodial and other services that thousands of RIAs use.

The firm didn’t have total insight into TD’s operations prior to the deal closing, Bernie Clark, head of Schwab Advisor Services, said on a call with reporters Oct. 6.

“We have talked around this deal for an oftly long time,” he says.

Now that Schwab has access to TD Ameritrade’s business and clientele, it’s embarking on an integration that could take up to three years to complete.

It’s a big undertaking for a big firm: The combined company has roughly $6 trillion in assets and 28 million brokerage accounts. “This truly is huge,” Clark says.

To pull off the integration, Schwab has established 25 different teams to head up the effort, overseen by Schwab COO Joe Martinetto, according to Clark.

Top of mind in the advisor services division: retaining new RIAs and adopting new technology.

Only 30% of the RIAs at Schwab and TD Ameritrade custody with both firms — meaning that the company will be onboarding thousands of new RIA clients in coming months.

M&A

Schwab closes TD Ameritrade acquisition, forming colossal custodian

October 6, 2020 8:27 AM

“That is an estimate, and we will know more specifically in the coming days,” Schwab spokesman Rob Farmer said in an email.

Clark wouldn’t detail Schwab’s plans for Veo One, but said that the company intends to build the “next edition” of its technology. “We will have a single platform at a point in the future,” he says.

What is clear about the merged firm’s technology offering is that Schwab Advisor Center will be at the core. Last year, Schwab said that its technology would remain at the base of all its systems. “Of course that will be true in the advisors segment as well,” Clark told reporters.

Victor J. Blue/Bloomberg

Schwab is determining how to combine referral programs, according to Clark, who noted the firm was cautious about overcrowding the network.

“Having everybody in a program that has very little supply really doesn't make anybody happy,” Clark says.

Clark wouldn’t comment with regard to TD Ameritrade Institutional’s employees, apart from acknowledging that “we will have some great people who won't be with us in the future — I'm certain.”

In months approaching the deal’s close, several TD alumni left the company, including Skip Schweiss, former head of its retirement solutions business, and the head of innovation Dani Fava.