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Thousands of independent RIAs flocked to the recently held TD Ameritrade Institutional LINC conference in Orlando, Florida — all seeking answers to questions for their clients and their businesses.
These game-changing questions stem from the blockbuster M&A announcement of late November that Charles Schwab will be acquiring TD Ameritrade in a massive $26 billion deal. The resulting organization will be branded as Schwab, and the Ameritrade name could end up in the dust-bin of history.
For years, TD Ameritrade has been a top advocate for independent RIAs. It has refused to enter into the competitive wealth management space that, in contrast, some other custodians have long coveted.
These custodians have viewed the field as a space where they should leverage their own powerful retail brands, $100 million advertising campaigns, employee advisors and extensive branch office networks to compete directly for mass-affluent clients — the bread and butter of the typical RIA.
As a result of fierce dedication to independent RIAs, TDA has developed a loyal following of 7,000 indie advisors who've built their businesses on the products, services and technology the firm has worked to innovate for the past 20-plus years.
Advisors often point out that the internal service culture at TDA makes a big difference to their clients and their ability to attract and retain business. "The best thing about TD Ameritrade is the people," many advisors said throughout the three-day industry event.
Similarly, TDA also has been known for being a technology leader not only for RIAs, but also for the fast-growing advisor technology community.
The success of the Veo Open Access initiative to provide its API to third-party software vendors and enable those nimble tech leaders to innovate solutions on top of the TDA platform for advisors has led to a vast renaissance in advisor technology. In fact, it is considered by some to be the best place for new startups with innovative solutions to enter the business.
According to technology guru and T3 conference organizer Joel Bruckenstein, who hosted a seminal technology panel at the conference, if the Veo platform gets subsumed by Schwab's systems in the acquisition, that may close the door to some tech startups hoping to get a foothold into the RIA space. "Other custodians have not been as open to new entrants and as a result, innovation for advisors will be stifled," he said.
Thus, these key aspects of TDA's innovation and culture were top of mind at the LINC conference, particularly for smaller firms that are not multi-custodian and thus rely solely on TDA for their back-office needs.
These thousands of smaller firms do not have as many options as larger, multi-custodian RIAs when it comes to accessing and developing custodial relationships; therefore, they could be at the mercy of the combined entity's new policies, service models and operational platforms.
Some of the biggest questions these firms had were gamely addressed by TDA custodian leader Tom Nally. In a break from traditional custodian conference keynote speeches, Nally addressed advisor questions head-on with a no-nonsense, low fanfare approach.
Due to the regulatory and antitrust issues involved, the two firms must continue to operate separately until the financial transaction is finished "sometime in the second half of 2020," he said.
As a result, there should be a lengthy (not to mention awkward and/or anxiety-filled) period when TDA staffers and affiliated RIAs may not know their fate.
"We are not able to even speak with Schwab's executives, so we really don't know the answers to many of the big questions," Nally said. "We have only just started joint discussions on an operational level with a small working team, and the business side is not included."
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