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.
In the first article in our series about the impending transition of TDA firms to Schwab’s platforms and systems, we covered the strategic planning and ways firms need to think about this experience from a high-level business-wide view. As we drill down to focus on the specific elements of the transition a large and time-consuming part of the process will be preparing for operational and technology changes.
This article will guide you through a checklist of key action items. It is organized by when you should do them as you prepare for the Labor Day weekend transition. Expect many of the items to be done right away, with a lull in the middle, and a final push just before conversion. That lull will be a good time to undertake some of the platform training so that your team is ready for the transition.
Our to-do list adds our expertise in executing Schwab’s high level action plan for advisors located within its Transition Planning Guide. You should refer to that transition guide for all the specific details.
The Operations To-Do List
Late First Quarter/Early Second Quarter 2023
- Designate a Firm Security Administrator (FSA) This is one of the earliest steps you should take.
Why: Schwab gives firms direct access to manage security controls. The FSA will manage users and permissions at your firm. It is important to note that Schwab will not automatically grant users access to accounts on their platform. The designated FSA will configure each user’s settings prior to the transition.
- Journey Map Your Operational Processes Document the current state and highlight the different touches and pain points along your processes. Future state might not yet be known for some time, but having a clear picture of your current state will put you at an advantage during and after the conversion.
Why: When you go through the Schwab new processes don’t just replicate one-to-one. Use your identified pain points to work with your new Schwab relationship management team to remove steps in the process that causes your team more work than necessary.
- Engage Your Current Third-Party Technology Integration Providers Your providers should offer their transition strategy as well as recommendations for best practices for how to prepare for the transition. For example, there are minor differences in the file specs and data points which may require them to contact Schwab Advisor Platform Support to ensure there are no gaps that impact your firm’s needs.
Why: Ensure they support the same integration capabilities with Schwab and understand the plan for activating the integration and converting former TDA account numbers to the new Schwab numbers. Doing this now will give you more time if you find you must make a vendor change.
- Explore Ways to Leverage APIs If you have customized development through API, take steps to understand what the API library capabilities are and look at other endpoints and efficiencies that can be gained.
Why: TDA’s and Schwab’s API libraries are somewhat similar, but the new system could offer opportunities to add to the client and advisor experience.
- Review all TDA Veo One Users Review and deactivate any users that your firm does not want setup as authorized agents on Schwab’s platform now and again just before the transition.
Why: Schwab will import all existing Veo One users to the Schwab Advisor Center to assist the FSA with user setups and you don’t want to authorize anyone who should not have access.
- Review and Refine Rep Codes Close rep codes that are no longer used by your firm now and again close to the transition date.
Why: TDA will automatically convert every active rep code to an FA master account at Schwab. Delete rep codes that aren’t being utilized now to avoid having master numbers on the system that you won’t use.
Second Quarter 2023
- Log in to Schwab Advisor Center, Attend Events, and Start Training All operations users of Schwab Advisor Center should log in, start training on the new systems, and attend Schwab events to gain familiarity ahead of the transition. Follow Schwab’s schedule of recommended training courses.
Why: We anticipate three to five months of training will be necessary to be comfortable with the system.
- Update Client Accounts Information, Preferences, Authorizations, and Paperless Settings This process is a good time to determine if your clients want any changes and look for opportunities to improve client experience. For example, do they receive paper statements today? Try to convert them to electronic statements.
Why: Account structure, types, registrations, data, preferences, authorizations such as trading authorization, and features will convert with no additional paperwork.
- Address Your Firm’s Single Sign-On Capabilities and Cybersecurity Policies Establish who will be involved in reworking the SSO—your internal IT team or MSP. If it is the MSP, contact them now. This is also a good time to review your cybersecurity policies to ensure that you are using the most up-to-date tools and procedures to protect your clients’ and your firms’ sensitive data.
Why: A new due diligence review and agreement between your firm and Schwab is required before the firm can implement SSO.
- Ensure Your Third-Party Managers are Available on Schwab Reach out to any TAMPs and third-party money managers to make sure they will still be available and that they have a transition plan for continuing services on Schwab’s platform.
Why: While there won’t be many, if they don’t plan on being part of Schwab’s managed solutions, you’ll need to find alternative solutions.
Close to Transition (Third Quarter 2023)
- Review Client Direct Deposit and ACH Instructions Catalog the clients who have auto-payments coming in prior to conversion so that you can refer to that list one month after the conversion to identify those clients who didn’t change their bank instructions.
Why: If the direct deposit or ACH was set up directly on a third-party platform such as the client’s bank, those instructions will need to be updated with the third party post transition. Work with clients to make those changes or encourage them to set up their direct deposit or ACH instructions directly on TDA’s platform as those instructions will be transferred over to the Schwab platform.
- Make a List of Open Orders to Transfer Set up a process with the trading team to ensure any Good til Canceled (GTC) orders clients want to roll over are set up on Schwab post-conversion.
Why: Current GTC orders will be canceled upon conversion.
- Review your Back Office Alerts Catalog what type of account maintenance, move money requests, digital account opening status alerts you have set up.
Why: Active and historical account related alerts will not be transitioned to Schwab Advisor Center; however, after the transition, you may enable alerts on Schwab Advisor Center and receive them for new activities occurring on the platform.
- Archive Your Veo One Data Files from the Inception of Your Rep Codes
Why: If you leverage a third-party vendor portfolio management system, you will have access to your historical TDA data that has already been populated into the system. Regardless, we recommend taking steps to download and archive all Veo One data back to inception. Doing so will give your firm easy access to historical data if needed in the future (such as a portfolio management system platform migration). There are firms like NDex that also help support storage of legacy data on your behalf.
Other Operational Considerations
There are many opportunities to improve your firm’s operations as a result of the transition to Schwab.
For example, some of TDA’s trading tools such as thinkpipes and iRebal are strong and desirable platforms. They will remain and will become available to former TDA firms and Schwab firms. All firms will be able to leverage these TDA technologies in ways that increase benefits around efficiency and client experience.
In addition, Schwab has more estate planning, trust services, banking and lending, alternative investments, and mutual funds options available. This is an exciting time to explore ways to take your business to the next level with their new product offers.
Finally, multi-custodial firms will likely have the chance to limit their exposure to custodians and streamline operations. If this is something your firm plans to engage in, think about how you will reallocate your custodial specialists once that reduction process is complete.
There’s Much More to Consider During this Transition
Schwab & TD Ameritrade Part 3: Preparing Your Clients for Change will guide you through working with your clients to ease the transition and understand the increased value you bring to the relationship.
In case you missed it, here's Schwab & TD Ameritrade Part 1: Preparing Your Business for Change.