A Note on the Schwab/ TD Ameritrade Merger

January 05, 2020
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Many of you may have heard TD Ameritrade has agreed to be absorbed by Schwab. According to Baron’s the companies expect the deal to close in the second half of 2020. As Baron’s reported the combined company would be an industry giant: TD would double Schwab’s brokerage account base to about 24 million, add 1.3 trillion in assets, while bringing in custody service for 7000 registered advisors. Baron’s goes on to highlight the fact that the companies can no longer count on as much revenue from equity trading since they eliminated commissions in early October. Schwab eliminated money markets for cash sweep accounts and pays a much smaller rate through its Schwab Bank. SVWA found much higher yielding tools for cash on both platforms.

That said it remains to be seen if these economies of scale achieved through the merger and corresponding savings will flow through to the consumer. We have already noticed some changes in service and slowing response times. We will keep a close eye on the changes as we look for alternatives. Our goal as always is to find the best tools available for our clients. More to come on this front.