The complete integration of TD Ameritrade’s business into Schwab’s, following the closure of the deal last fall, won’t occur until 2023—at the earliest. Once predicted to conclude as soon as next spring, full integration of the two businesses will now be complete no sooner than April 2023, said Bernie Clark, head of Schwab Advisor Services, at a press conference on Monday. The integration is still on track to be wrapped up within 36 months of its closing in October 2020, as originally stated.
During the call, no reason was given for the updated timeline and Clark didn’t rule out future layoffs as the integration continues.
“We talked about it being a 30- to 36-month endeavor for us to get to integration,” Clark said. “While we're still on that timeline, it will be later towards the spectrum of months. Probably closest to the ending side of the 36.”
A spokesperson later clarifed that Clark was reiterating information shared by Joe Martinetto, SVP and chief operating officer, in April, in which Martinetto referenced "unprecedented volume growth" and an "expanded scope of technology work" as reasons for the "revised integration plans." Advisors have frequently asked about the integration timeline, according to the spokesperson, and Martinetto anticipated it would cost up to $2.2 billion total in one-time integration costs.
Schwab clients will receive “more details and updates” on the integration before the end of the month, said Clark. Meanwhile, TD Ameritrade and Schwab will continue to run two separate custodial platforms “for the coming year, plus.”
But the integration is progressing, albeit slower than the firm’s most optimistic scenario. The leadership, technology, control and training teams of Schwab and TD Ameritrade have all been combined, said Clark, however future job cuts could be coming “where there’s duplication of roles.” In certain cases, staff may also leave because there are fewer senior positions available, he added.
Meanwhile, client-facing roles won’t be impacted, said Clark. “I will tell you that we're not impacting client-facing individuals at all, on a going-forward basis, and haven’t since the inception of the deal itself.” The firm took a hit to its reputation earlier in the year, with angry advisors criticizing service shortcomings at the firm. Schwab responded by adding staff.
Schwab also continues to build out digital capabilities on the back end of onboarding and account opening workflows, said Jalina Kerr, senior vice president of client experience at Schwab Advisor Services. While e-signature and electronic account opening capabilities are live for advisors, there is still a “paper trail” for Schwab. Schwab has tried to tame its paper tiger since at least 2019, and Kerr predicted that “in the next few weeks” the firm would unveil a “completely digital experience from account open through account funding to account setup.”
