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What to Make of Schwab-TD Ameritrade Integration Plans

By Jeff Berman

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Charles Schwab’s first detailed announcement on how it plans to integrate TD Ameritrade’s technology into the combined entity is drawing mixed reviews.

Schwab said late Wednesday that TD Ameritrade’s thinkorswim and thinkpipes trading platforms, educational resources and tools will be part of what it offers clients of independent advisors and other investors following its acquisition of a former rival, set to wrap up by year-end.

It also plans to keep TD Ameritrade Institutional’s portfolio rebalancing solution, iRebal, for RIAs. The full technology integration is expected to take 18 to 36 months to complete after the deal closes, meaning the tech tie-up would be ready in about mid-2022 at the earliest and by the end of 2023 at the latest.

Schwab’s plan is “definitely a win for TDA advisors, as those assets were truly differentiated from TDA’s superior technology offering vs. Schwab,” Tim Welsh, head of the consultancy Nexus Strategy told ThinkAdvisor by email on Thursday.

“However, as history has shown, nothing ever goes smoothly in a technology integration, so the disruption from the massive merger for advisors will be real,” he noted. “Will they stick around and muddle through it?  That is the $26 billion question.”

Meanwhile, Joel Bruckenstein, head of Technology Tools for Today, called Schwab’s plan a “good move” in a tweet on Wednesday.

(The thinkpipes platform offers advisors features that include real-time charting and efficient trading and allocation.)

More Critical Views

Gavin Spitzner, president of Wealth Consulting Partners, differed from Bruckenstein in his views of the tech development. He called Schwab’s announcement “non-news news in the sense that I can’t imagine Schwab saying anything other than they’re going to maintain thinkorswim and other legacy TDA solutions.”

Schwab seemed to be “simply saying they’re retaining both legacy trading platforms — thinkorswim and Schwab’s StreetSmartEdge — and they’ll figure out how to integrate later,” Spitzner told ThinkAdvisor by email on Thursday.

“They’re not going to tell either set of existing users they’re shutting down their platform. Instead this freezes the market and kicks the can down the road, which is exactly what I would do,” explained Spitzner.

“The tougher work is ahead because, of course, long-term it doesn’t make sense to maintain two separate, but similar, capabilities,” he added.

Since November when the acquisition was announced, Schwab said it “would carefully evaluate the existing technologies from each firm as part of a single, unified, world-class platform that combines the great capabilities, education and service clients enjoy at both firms,” according to a spokesperson.

“We are committed to leveraging material advantages in TD Ameritrade’s platforms when doing so enables us to deliver a differentiated experience to all of our clients. That commitment drove this decision,” the firm added in a statement.

The plan to adopt the thinkorswim suite of products and related educational resources “reflects its status as one of the strongest retail active trader platforms in the industry,” said Barry Metzger, senior vice president of Trading Services at Schwab, in the firm’s announcement late Wednesday.

Schwab’s plan is to “combine the great capabilities, tools and service at both firms to provide a unified, world-class trading experience for clients,” Metzger added.

Platform in Progress

The combination of the two firms’ “respective trading teams’ experience and capabilities with the advanced trading technology of thinkpipes will create an even more compelling offer for advisors when integration is complete,” according to Bernie Clark, executive vice president and head of Schwab Advisor Services.

Tom Bradley, the TD Ameritrade veteran whom Schwab hired to oversee the integration of the two advisory businesses, said early this year that Schwab’s plan was to “come up with a best-of-breed platform.”

However, there continued to be concerns by some in the industry that Schwab would favor its own tech and tech executives over TD’s, and that only continued after the Department of Justice approved the acquisition and the vast majority of shareholders of both firms voted to support the deal in June.

Dani Fava, who led innovation for TD Ameritrade Institutional since 2016, recently left the company and joined Envestnet as head of strategic development, and industry watchers expect other TD talent to follow.

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Jeff Berman

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