Schwab & TD Ameritrade Part 3: Preparing Your Clients for Change

F2 Strategy released an independent 5-part Insight Series to support TD Ameritrade Institutional firms as they transition their technology to Schwab Advisor Services. The series will cover a range of areas they need to attend to during the conversion and best practices to optimize their businesses during this period of transition.

After considering your transition to Schwab from the high-level, strategic and holistic lens for your business we established in the first article, you can begin to drill down into specific action areas. The relationships you build with clients are some of the most important aspects of a wealth management business—more important than the numbers you put on paper. Therefore, it’s important to thoughtfully prepare clients for what’s ahead and maintain their confidence during the transition. You can also take the opportunity to show new benefits and increased value in your advisor-client relationship.

Large scale technology conversions like TDA-Schwab will impact end clients in at least three ways: their behavior, their custody of assets, and how they access information. This article will provide ways for you to establish a strategy and a timeline for preparing your clients for this imminent transition in each area. With advisors scheduled to complete their  transition to Schwab  over the Labor Day weekend,  the timing suggested will align with that plan.

The Impact on Client Behavior

Clients understandably have questions about the transition. “What does this mean for me?“ “I just transitioned all of my accounts to a new advisor, does this mean I have to do that all over again?” “Will I have access to the same services?” “Will my advisor still be able to provide me with the same attention I’ve come to expect?”

Client personas can be extremely helpful while preparing answers to these questions. When you have a sense of your client types and their needs, it will be easier to understand what and how you should communicate. Tactically, to effectively build a comprehensive communications plan, create a checklist for each client persona. The checklist will be different for each persona and will include a mix of the following advisor and/or client actions:

  • Client document preservation—Understand what history and documents will transfer over for clients. Schwab will maintain four years of account history, 10 years of account statements, seven years of tax documents, and two years of trade confirmations. For records beyond this, a special request will be required. While 10 years is enough from a compliance and regulatory standpoint, it may not be enough for your long term clients. Plan what you will need for your clients that you’ve had for more than 10 years and get those documents ahead of the conversion. Consider using a centralized document vault to manage pre-Schwab documents and post-Schwab documents. You don’t want to be looking for documents later after conversion. 
  • ACH/direct deposit instructions—Help clients identify which instructions are set up directly on the TDA platform, as those will be automatically transferred to Schwab. If a client set up instructions on a third-party platform such as their bank or through an account aggregator platform to initiate deposits to TDA, they will have to update those instructions themselves. Clients may not know which are which and they may have both. If this isn’t addressed ahead of time, clients may find certain instructions aren’t carried over.
  • Payment features such as checks and debit cards—While this is less common, it should still be part of the checklist. For a certain period of time, clients will be notified about outstanding checks and they will receive new checks and debit cards if they’ve used these within the past 24 months. If they haven’t done anything within the last 24 months, they will need to update the instructions (this could be of particular concern to retirees.)
  • 2024 tax preparation—Clients will likely receive tax documents from both TDA and Schwab for 2023 for times representing pre and post-conversion. Remind them to look for two documents in January 2024 before they send information to their accountants or file their taxes. 
  • Open orders—Discuss any open orders with clients. Good til Canceled (GTC) orders will be canceled upon conversion so if you’re using these with any clients, it’s a good time to reach out to determine if you want those to continued, and if so, set up a process with the trading team to ensure the order is entered on Schwab post-conversion.

Impact on Custody of Client Assets

Custody will change as a result of the transition. One common question when the TDA-Schwab deal was first announced was how this process would occur and would clients open new accounts or file additional authorization forms. The answer is that the vast majority will not have to take action themselves. A new account will be opened automatically with a new 8-digit account number that will be accessed through Schwab Alliance.

The rare registration types not supported by Schwab will require additional inputs from clients. In these instances they will likely receive direct communications from Schwab which you will have notice about and can be ready to support your clients that have to repaper.

The Impact on Client Access

A big step in this process will be to prepare your clients for conversion from AdvisorClient to Schwab Alliance. Rather than just mapping the AdvisorClient experience to Schwab Alliance, now is a great time to assess your overall client portal experience – do clients have to access multiple portals for different information? Is there a better way to consolidate activities so clients have one portal?

As you’ve likely noted, many features are the same on both platforms. However, Schwab Alliance will bring a few added benefits to you and your clients. One clear benefit for advisors is the white labeled experience which makes it look more unified and doesn’t feel like they are leaving the advisor’s office. Another is the single login which delivers a more unified client experience by reducing the amount of logins they need to manage their accounts.

Take this time to assess your current client experience. Are you able to provide all of the services your clients need? Are there any opportunities to expand your service offerings through availability of products from Schwab? Are there any products /services you’re currently offering that you won’t be able to under Schwab? For example, if you hold any securities not supported on Schwab you may be able to carry those over, but you won’t be able to add to them. Create a plan for how to manage or replace those going forward.

Building a Client Engagement Timeline

There are only a few months until the conversion. Start the planning and preparation process now.

Create a timeline of client communications within the planning process. Refer to Schwab’s timeline of events for the conversion to align your communications with it and stay ahead of big action items your clients will need to know. In addition to integration-planning resources for advisors, Schwab offers online help for your clients. [3] And, keep in mind that Schwab will be contacting clients directly at certain points and you will want to work those communications into your schedule to provide a smooth transition for clients.

For example, 60 days prior to conversion (estimated beginning of July), Schwab will contact account holders directly to share disclosure and notify them of the conversion. Prepare your clients for this notification in June to avoid having a deluge of concerned clients calling in if they receive this notification without warning.

Also note, Schwab says that 90 days prior (early June) clients using AdvisorClient will receive in-app notifications about what they need to do to prepare their current portal for transition and 28 days prior to conversion, clients will be invited to set up credentials on Schwab Alliance. Note these times on your timeline as key points when you need to be prepared to field numerous calls and questions.

The more prepared your clients feel about the transition the better. Taking time to strategize the best messaging that will give them confidence in the new systems will solidify your relationship. Remember to present this transition in the best light by highlighting the increased value you can bring to them with Schwab’s capabilities.

Up Next: Connect with Vendors

This transition affects many others besides your clients and internal teams. In Schwab & TD Ameritrade Part 4: Preparing Your Vendors for Change, we will discuss working with your third-party partners to make sure they are ready to handle the conversion.

Review the entire series of articles:

Schwab & TD Ameritrade Part 1: Preparing Your Business for Change

Schwab & TD Ameritrade Part 2: Preparing for Operational Change

Schwab & TD Ameritrade Part 3: Preparing Your Clients for Change

Schwab & TD Ameritrade Part 4: Preparing Your Vendors for Change

Schwab & TD Ameritrade Part 5: Post-Change Areas to Optimize

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