In November of 2019, The Charles Schwab Corporation agreed to buy TD Ameritrade for about $26 billion.  Almost four years later, they finally transferred the assets of clients of Registered Investment Advisors on September, 5, 2023.  Retail accounts should be transferred over in the Spring of 2024.  In today’s blog, I will share my first impressions of the transfer and provide some key learnings.

This was the biggest merger of a financial custodian in history and we did spot checks to make sure the assets were transferred properly.  To my knowledge, everything transferred smoothly.  If you use my Advisor Dashboard, wealth.emaplan.com/ema , the values are up to date and are now pulling in from the Schwab site.  Let’s dig in.

Pros of Schwab

The client site and App.  The Schwaballiance.com site and Schwab Mobile App (blue app with white letters) are an upgrade from the advisorclient.com site at TD Ameritrade.  Schwab has a lot of forms that I can start and clients can accept and sign in the site or the app.  This should save a lot of time and reduce mistakes.  I have already used this system to get a wire out faster.  It also avoids the sometimes difficult verification questions from docusign.  I sense that Schwab is going to invest a lot more in the site and app and recommend everyone create a login.  When you log into Schwaballiance for the first time, you will see a section at the top that says “Here’s How to Get Started With Schwab Alliance.” Click “confirm your client profile” in that section.  Many clients will need to update the field for their home address and move their home phone to the home phone section and add their mobile phone numbers.  I also recommend viewing your beneficiaries.  Schwab will allow you to update them directly on the site.  At TD Ameritrade I had to get all of the information and send them to clients in a docusign envelope.  This will save a lot of time.

You will notice that you only have access to accounts that are in your name or that you have partial ownership of.  If you would like to add a spouse, partner, or family member, click Profile in the upper right hand corner and then click Account Access.  This will allow you to send an email from Schwab to the person you want to give view access to.  They can accept it and in about a day they will be able to see your account when they log into Schwab.  Unfortunately you can only select one account at a time.  If you use my Emoney Dashboard, this may not be necessary.

Retirement Plans.  TD Ameritrade was not in the retirement plan business.  Schwab runs several large retirement plans.  Schwab also offers a Personal Choice Retirement Account, which is a self-directed brokerage account that is part of some 401(k) plans.  I have already had a client move some of their 401(k) over to the brokerage side of their 401(k) at Schwab and sign a form that allows me to manage the PCRA brokerage link part of their 401(k) plan.  This is a benefit for a client who is not happy with the standard choices in their 401(k) and would like access to invest in almost any stock, bond, or mutual fund inside of their 401(k) plan.  Lastly, it is nice that you can see a Schwab 401(k) in the same website where you view your accounts managed by Domestique Capital.

Sprott Physical Uranium Trust.  In July of 2021, Sprott (a giant Canadian Asset Manager) purchased the Uranium Participation physical uranium fund and changed it for the better.  They changed the fund to operate like a closed-end fund where the trust’s price can trade above or below the price of the physical uranium they store in warehouses.  When investors’ sentiment is negative on uranium, they may sell the shares of the trust where each share price is worth less than the shares would be worth if they sold all of the uranium in the warehouses.  When investors are excited, they may bid up the shares of the trust higher than the value of the physical uranium or Net Asset Value (NAV).  When the trust trades for a price above the NAV, the trust sells shares to raise cash.  The trust uses the cash to buy more uranium.  The trust now has almost $4 billion of uranium in storage.  The Sprott trust, along with other similar investments like Yellowcake PLC, is helping bring transparency to the spot price of uranium and has become a catalyst for a increasing the price of uranium.

Sprott also runs a physical gold and physical silver trust that trade in the U.S.  The Uranium Trust was not approved by regulators in the U.S. and I argued hard with TD Ameritrade for allowing us to buy the trust on their platform.  I lost the argument, but now that we are with Schwab, I can invest in the Uranium Trust.  Mining is a very risky business where you could have production issues or might even have to worry about a coup in Niger.  I like how the Sprott Physical Uranium Trust allows me to express a bullish view on the price on uranium without having to take specific, country, mine, or company risk.  Harris Kupperman, CIO of Praetorian Capital, just wrote an excellent article after attending the World Nuclear Association meeting in London last week.

Reputation.  There are a few firms that I don’t trust and would not have moved to if they had purchased TD Ameritrade.  I consider Schwab one of the good guys in the financial services industry.  Charles Schwab is the original discount broker and they have been an advocate for investors by continually lowering commissions which allowed average investors to be able to participate in the stock market.  They were also one of the first custodians to allow Registered Investment Advisors, like me, to invest money on behalf of their clients.  In addition to a strong reputation, it doesn’t hurt that Schwab is GIANT!  They have $8.24 trillion of client assets.  With these kinds or resources, I expect them to continue to be a leader and reinvest in their company and tech to make our lives more efficient.

Cons of Schwab

Getting Clients Their Cash Slower.  TD Ameritrade Institutional had a great policy that cost them millions of dollars per year to help advisors service their clients.  When a client would call me with an emergency need for cash, I could sell an ETF and send the funds out the same day as long as I processed everything by 3:15 CST.  When you sell a stock or ETF, the cash from whoever bought the shares doesn’t come into your account until two business days after you trade (T+2).  TD Ameritrade would front that cash and allow clients access to remove it from their account on the same day.  Schwab makes you wait the two business day before you can send cash to a client’s bank account.  The first time I needed to send a client money from Schwab was Thursday, September 7th.  I thought I would be able to have the money in their bank on Friday the 7th.  I was saddened to learn that Schwab makes us wait until the funds are settled.  Instead of getting the funds the very next day, my clients received the funds on Tuesday, the 12th; four days later (because of the weekend)!  If you think you will need money from your investment accounts, please reach out as early as you can.  I don’t think Schwab is going to change this policy.

Advisor Website Architecture.  While I think the client website is an upgrade, the advisor site has been a let down for me and financial advisor friends.  The TD Ameritrade Veo Advisor site was superior to Schwab’s Advisor Center.  TD’s top website architect must have worked very hard with actual advisors to help drive efficiency.  Everything was intuitive and it was easy to get the information you needed to run your advisory business with minimal clicks.  All of the forms that were submitted for processing were in one place and you could clearly see the status of each form and know if you needed to follow up with TD on any item.

TD had an excellent dashboard where you could tell the site what types of alerts you wanted to see and throughout the day, you would click on an alert that Mr. Smith’s rollover came in and there was a hyper-link that would take you right to the account so that you could invest the new cash.  Schwab’s alert system allows you to customize the types of alerts you see, but it doesn’t have an alert for cash coming in or out of your accounts!  This is the most important information I want to see.  In order to get this data at Schwab, I have to click Move Money > a screen asking me to go to the Move Money Legacy site > Find My Master Code > Browse Tab > select my master code > and finally I am on a screen that shows all the cash that came in and out of client accounts for the last few days.  Unfortunately the page just lists an account number, client name, and a bank name.  It doesn’t even tell you if the money came into or left Schwab.

Normally when you are thinking about a client’s account, you first look at their positions to see what they own and how much cash they have.  You then make a trade by going to the trading tab.  The TD site was intuitive and the account you were looking at in the positions tab would follow you over to the trading tab.  When you click trading on the Schwab site after looking at Mr. Smith’s IRA, it takes you to Ms. Jones, Roth IRA, because she was the last account you looked at in the trading tab.  It is easy to not catch this and make a trade in the wrong account.  There are other irritating things like alerts not listing the accounts they are associated with, human errors, poor layout decisions, and features not working in my Firefox browser or because I don’t use a Windows Operating System.

Fortunately you, the client, doesn’t have to deal with any of this.  I can get my job done with this platform, but it has been a disappointment and needs improvement.  I get the sense from Schwab representatives that I talk to that they know the TD Ameritrade advisor site was better.  I am hopeful with thousands of new financial advisors complaining and Schwab retaining some of the talented engineers that improved the TD site over the years, the Schwab Advisor site will get better and better.  Afterall, TD Ameritrade didn’t buy IRebal until 2007 and allow accounts to be opened via docusign until 2011.

If you have any questions about the transition, please schedule a call through the link in my email footer or through my website.  Change can be challenging, but it is a constant.

Photo Credit: Djkeddie