Schwab & TD Ameritrade Part 1: Preparing Your Business 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.

The wealth management industry is keenly aware that Schwab bought TD Ameritrade (TDA) in 2019 and is in the process of completing the merger. According to Schwab in October 2022, the company remains on track to transition the vast majority of TDA accounts to Schwab over the Labor Day weekend. The transition affects thousands of TD Ameritrade firms that need to transition their myriad of technology systems and platforms to Schwab’s systems over the next year.

This series of articles will guide these firms through the process of converting their systems, as well as help them take this time as an opportunity to help them achieve stronger outcomes for their businesses. The first article focuses on strategic considerations. 

Strategic Considerations Regarding Large Scale Technology Conversions

This is an acquisition-driven technology conversion versus a needs-based/obsolescence conversion. Acquisition-driven conversions are rare opportunities for you to unlock previous constraints and help your business enhance its technology beyond what was available in the past. In addition, they provide the time and space to look at your technology strategy for complex business processes holistically rather than piece by piece as individual systems are upgraded.

We seldom get an opportunity to sit down and review what we do and why we do it. Many wealth management firms’ processes and client experiences evolved organically over many years. Nobody questions them and everybody (including your clients) are likely so used to them, that they are never questioned. Your conversion process is an AMAZING time to do some spring cleaning. Eliminate old, outdated processes that drag down efficiency or weigh on the client experience. Your goal during this conversion period should be to use your time wisely to come out of this conversion a better, more efficient and technology-adopting company. 

Start by viewing this conversion from two perspectives. From the business lens, ask ‘what do you want to achieve?’ and from the technology lens, ask ‘what needs to be replaced, enhanced, or maintained to achieve it?' Have the courage to consider ditching the old tools that you’re used to in favor of the new, integrated ones. There is a high likelihood that integration and ubiquity within the new custodian framework will outweigh specific tool functions you grew used to over the years. Specific areas that should be addressed include:

  • Workflow documentation and efficiency. Understand your current workflows and explore ways to increase their efficiency.
  • New capabilities. You need to look for places where new tools, for example, digital onboarding, can amplify your business and make you more attractive to clients and next-gen/beneficiaries.
  • Data clean up. We gather a lot of data, but it is not useful if we don’t clean, store and analyze it properly. You need to own your data and let it drive client experiences and operational efficiency.
  • Third-party integrations management. Within your ecosystem of tools that will remain throughout the conversion and ones that will be reconsidered, determine how the integration points might change.

Beyond systems, examine your holistic technology strategy. What does your client experience look like today and what could it look like tomorrow that would make it even better? (Schwab & TD Ameritrade Part 2 will focus entirely on the specifics of preparing clients for change.) If you are considering a change to your technology, do so in a way that does not interfere with the conversion or add complexity where it may not be needed.

Ask are clients using TDA’s AdvisorClient? If so, why and how often? Do clients have access to other client portals and if so, why and how often are they accessing those? Does this conversion give us an opportunity to consolidate the number of portals a client accesses and streamline their experience?

Change Management

There are three areas of change management to address: internal processes, external client expectations and internal staff. To manage change in each of these areas, firms should employ several tactics.

First, leadership centralization. To maintain maximum effectiveness for change management and progress quickly, centralize the process by appointing one team member or a small group of team members as the leader of this transition. This person or team is dedicated to understanding the impacts to all of the stakeholders. They will document how to proceed; plan how and when to communicate to clients; and liaise between your firm, clients, and Schwab.

Top level accountability that can provide client and internal advisor perspective is a critical component. A chief operating officer or director of operations would be the ideal person for this leadership role. Smaller firms that don’t have a dedicated head of operations role should use this opportunity to consider its importance within the firm. An operational leader can improve your business by dedicating one person to think about workflow, technology, and compliance and how they can cohesively work together. Additionally, someone in a client experience role, such as a manager of advisors, vice president of strategy, vice president of client experience who has spearheaded the client experience playbook for how advisors operate within a firm can be a strong change leader as well.

Next, focus on communication. F2 Strategy Executive in Residence, Jen Fox, wrote that “change leadership is incremental, additive, visionary, and storytelling.” Your firm needs to ensure that your team is ready for the change, not just that they have knowledge of it. 

A critical part of communicating about change is to remember that even though clients and staff may be told about the process or technology changes or upcoming policies to be implemented; without context and repetition, the listener is often lost when the change actually comes. Establish a communications timeline that repeatedly reassures them that they will receive the same level of advice and services, they will see some improvements, and that some processes will be different (which is not bad).

Fox recommends that change leaders acknowledge past successes, demonstrate how this change will enhance their work, provide tools and role play, develop repeatable processes and check in to see how messages are resonating with both employees and staff.

Finally, use technology tools such as project management software like Asana, to coordinate across all team members. This will help with operations, automation, onboarding and provide long term value to your firm.

Again, this transition is a good opportunity to make other changes. It’s highly likely you haven’t examined your legacy processes in many years. Don’t just replicate the old way of doing business or convert your old processes to new systems. List out those processes and compare them to your new tools to explore better ways of doing business.

Avoiding Potential Pitfalls 

A transition of this magnitude is a lot to stay on top of, but mistakes can be costly. There are two major pitfalls to focus on.

The first is assuming your vendors are ready for the change. It is imperative to proactively confirm with the providers of your current tech stack that they are plugged into Schwab and to understand what they are doing to prepare for transition. If you find they are not ready or willing to handle the transition, it's time to decide if they are the right vendor for you going forward. This is such an important topic we will have another article dedicated just to vendor management.

The second is under communicating. The risks of under communication will lead to headaches down the road. Remember that when you send out an email, not everyone will read it or read it at the same time. Repeat messages, put them in different formats, and consider multiple methods of communications.

Holistic Evolution of Your Business

This conversion is an important time to embrace a strategic and holistic approach to developing or evolving business processes and upgrading technology. By seizing a rare opportunity for good, you’ll position your business for a higher level of success over the long term.

Up Next: Technology and Operational Changes

The next area of focus is operations. Schwab & TD Ameritrade Part 2: Preparing the Operational Change will cover back office considerations to make sure you are ready to implement the changes needed to technology systems and platforms while also looking for places to increase efficiency and cost-savings.

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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