A Changing of the Guard

The Greek philosopher Heraclitus once said, “Change is the only constant in life.” I’m sure we can all relate to this, right? I remember growing up in Harnett County, North Carolina. Now, I don’t know about you, but anytime someone tells me the county they grew up in rather than the town or city, I believe it’s safe to assume it is in the middle of nowhere. If you go to Harnett County today though, it’s certainly not the same as it was twenty to thirty years ago. The areas around my family’s home, once primarily wide-open grasslands, are now full of neighborhoods, a fire department, and even roundabout traffic intersections. While it can be scary at times, change is inevitable and is really an opportunity for progress.

Just like rural North Carolina, the investment management industry is not immune to change. Back in late 2019, Charles Schwab & Co., Inc. (“Schwab”) announced that they would be merging with TD Ameritrade Holding Corporation (“TD Ameritrade”). Fast forward to now, summer of 2023, and the two powerhouses of the financial industry are officially finalizing the integration process. We here at Cardinal use TD Ameritrade as our custodian, to hold client funds and process trades, and so have been preparing and planning for this merger since it was announced. As things continue to ramp up over the coming months, I wanted to take some time to talk about this change and what it means for you, our clients.

Those of you who have opened accounts with us at TD Ameritrade in the past month will have completed a “Consent to Transfer Letter” that was submitted alongside the usual account application. This was the first direct client-side acknowledgment that your money will transfer to Schwab, giving consent to move your accounts under Schwab’s umbrella later this year. That said, most of our clients have had accounts open before this form was ever required or even created, so you wouldn’t have been asked to fill it out.

For most of you out there, the first big date to keep in mind is June 28th. That is when TD Ameritrade and Schwab will start mailing out “Account Transition Notices,” or formal client notices of the upcoming transfer. These letters will be written similarly to the Consent to Transfer Letter and will allow existing accounts to be moved under Schwab’s umbrella using “negative consent,” meaning that if you do not opt out of the transfer then you are assumed to be consenting to it. When you get these letters, it is important to read them and understand them but also to not worry, knowing that there is no action necessary.

The next major date to pay attention to is August 1st, when Schwab plans to mail out the “Key Information Packet” to account holders. This packet will be the most important item sent by mail, as it will contain your new Schwab account numbers, instructions on how to create your Schwab Alliance Login ID and password to view your accounts on their client portal, and further information on the overall transition. When you get this packet, I encourage you to read through it and contact me or the rest of the team here at Cardinal with any questions that you have.

The last major date to know is September 5th. The last push of the transition will occur over Labor Day weekend, so on this date the transition will be finalized and you will have access to your accounts at Schwab; all future account activity will be through Schwab. Also on this date, two statements will be sent to you by email or mail: one from TD Ameritrade showing a $0 balance and the other from Schwab showing the funds that have moved over. You should review these statements and contact us if anything looks off. From then on, it will be effectively business as usual, albeit with a different custodian. Similar to the way things work now, if you need a distribution, have questions about your account, or need any other services, you will still be contacting Cardinal. This may look like a big change, but we plan to make the transition as seamless as possible for you so that it doesn’t feel like such a big change after all. While Schwab will be the custodian you now see on your account statement letterhead, access to your same team at Cardinal remains unchanged. We look forward to the additional tools and resources Schwab will provide to clients and advisors alike once this long-anticipated transition is completed.

You’re likely sitting there thinking that there will be a ton of paperwork to update beneficiaries, Move Money instructions, and more due to this merger, but fortunately that is not the case. Although there are some exceptions for business accounts, custodial accounts, and a few other account types, beneficiary designations will transfer over for most of our clients’s accounts. If these exceptions apply to you, we’ll be sure to let you know as we get closer to September. Move Money instructions, which are used to link your bank accounts and your TD Ameritrade accounts, will also carry over to your new Schwab accounts. We will be checking on all our clients’s accounts before and after the Labor Day weekend transition to ensure that things all complete the process successfully, but we don’t expect there to be many “to-dos” for our clients.

While most of the required action items will be on the Cardinal team to manage, there is one thing you can do to help: If you’ll want to have access to your account information on the Schwab Alliance client portal, we recommend you set up and/or review your access to AdvisorClient.com, the portal to view your accounts at TD Ameritrade, now. Even though you will not be able to use the AdvisorClient portal in just a few short months, being enrolled in AdvisorClient will make transitioning to the Schwab Alliance portal a smoother process for you. As long as you have created AdvisorClient login credentials, once you receive your Key Information Packet in August, you will be prompted to create your Schwab Alliance login. One important thing to note is that any married clients who share one login to AdvisorClient will each need to create their own access to Schwab Alliance after the transition.

We always say that “The squeaky wheel gets the grease,” so as we get closer to September, if you have questions, concerns, or worries about this process, be the squeaky wheel and let us know.

We are excited about the future with Schwab. I want to assure you that even with new account numbers, a different online portal to view those accounts, and a name change on the custodian, your experience should be just the same after September 5th as before it. You’ll still be working with Buddy, Dr. Custovic, and myself, and our goal is to make this as smooth as possible for you. Keep an eye out for the mail over the coming months, but trust that we’re here to walk you through everything step by step and to help you feel just as excited as we are about this change.

Jacob Yocco, CFP®