September 22, 2023

The announcement of the merger between Charles Schwab and TD Ameritrade in November 2019 kicked off a marathon of preparation for advisory companies to transition their shoppers on the TD Ameritrade custodial platform to Schwab. And with the ultimate conversion of shoppers scheduled to happen over the upcoming Labor Day weekend of 2023, the marathon is approaching its last dash towards the end line. Whereas many RIAs have already tackled a number of the larger points across the conversion comparable to informing shoppers of the modifications and updating regulatory paperwork, there are nonetheless some operational intricacies within the TD Ameritrade to Schwab transition course of for advisors to deal with that might trigger complications in the event that they’re missed.

On this Visitor Put up, Grier Rubeling, a transition guide for RIAs and founding father of Advisor Transition Companies, affords a collection of actionable ideas to assist advisors (and their shoppers) get by the ‘Schwabitrade’ transition easily.

At a excessive degree, a number of the operational challenges of the transition quantity to adjusting to Schwab’s manner of doing issues for advisors who’re used to TD Ameritrade. For example, TD Ameritrade rep codes which might be used to arrange shopper accounts might be transformed to an 8-digit Schwab “grasp quantity”, which is used for account grouping, billing, account service, and extra. Advisors may even have to familiarize themselves with Schwab’s remedy of sundry accounts for payment billing and tax withholding elections for distribution, each of which differ in some key methods from TD Ameritrade.

Moreover, though Schwab states that almost all advisors’ tax-lot settings for price foundation functions will carry over after the conversion, some advisors with particular personalised settings (comparable to having a number of default lot-selection strategies for various safety courses) will probably have to analysis Schwab’s Transition Planning Information for info on whether or not and the way these settings could change post-conversion. And any modifications made between now and the conversion date of Labor Day weekend probably will not carry over, that means they’d must be re-implemented as soon as the transition is full.

Lastly, there’s a class of duties that entails tying up some unfastened ends that will stay after the conversion. For instance, any checks or third-party direct deposits addressed to TD Ameritrade might be accepted for round 90 days after the conversion, however could encounter delays, so it is vital to make sure that shoppers’ deposit directions are up to date shortly. Moreover, any open commerce orders (e.g., Good-Til-Canceled or Good-Til-Date orders) for non-mutual-fund securities might be canceled and can must be re-ordered after the conversion. And for shoppers with IRAs, all contribution and distribution reported by Schwab will replicate solely post-conversion transactions – that means that advisors might want to preserve cautious information for any shoppers who contributed or withdrew previous to the conversion.

Finally, whereas that is in no way a completely complete listing of potential points for advisors to contemplate in regards to the TD-to-Schwab conversion, they could be a number of the most typical and vital to deal with to make sure a clean transition. As a result of with Schwab’s customer support assets prone to be stretched skinny within the days and weeks following the conversion, the extra potential points that advisors can establish and tackle earlier than they develop into an issue, the much less of the advisor’s personal assets must be tied up in operational complications (permitting them to maintain the concentrate on their client-facing work)!

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