Nathan Dutzmann, the chief investment officer of Roundtable Investment Strategies, was looking into a client's portfolio recently when he noticed something strange about a recurring monthly withdrawal set up for one of her portfolios.
The account, originally opened on TD Ameritrade's Veo system, was supposed to take out money on the first of each month. But on Schwab Advisor Services, where all TD accounts moved following the Labor Day conversion, her October withdrawal occurred on Sept. 29.
Dutzmann discovered the same thing happened for several clients that were supposed to receive a recurring withdrawal on Oct. 1. As he wrote on VettaFi's Advisor Perspectives website, the culprit is a small difference in how systems at TD and Schwab handle weekends and holidays.
This could create headaches at year-end for clients taking required minimum distributions, he said.
"This seems like a really big issue," Dutzmann told ThinkAdvisor. "Schwab should have noticed this."
A Schwab spokesperson told ThinkAdvisor in an email that the firm had been listening to advisor feedback and that it was "honoring all advisor elections for retirement account distributions to help ensure that RMDs for the 2023 tax year are processed to meet clients' year-end deadlines." Schwab staff were unavailable for further comment.
Effective Dates
At TD, advisors would specify an "effective date" of recurring withdrawals. If this date fell on a weekend or holiday, the system moved it to the subsequent business day, and the money would settle in client accounts on the next business day, the "completion date." So when Oct.1 occurred on a Sunday, the system moved the effective date to Oct. 2, and the completion date to Oct. 3.
