Schwab nears completion of digital client onboarding as TD integration accelerates development

Though the integration between Charles Schwab and TD Ameritrade is still years away from completion, the acquisition is starting to pay dividends for Schwab’s advisor-facing technology.

In July, independent financial advisors will be able to open, fund and set-up multiple account types on Schwab’s custodian platform in a completely digital workflow. The new digital onboarding adds money movement, either with an account transfer or automated clearing house, to Schwab’s existing digital account opening tool, and expands the number of supported account types to include living trusts, inherited IRAs and custodial accounts. Ongoing account maintenance, such as adjusting an address or phone number, can be done in the same workflow.

The new functionality cuts the overall time it takes to onboard a new client in half, and could probably squeeze it down even further as more get comfortable with processes like Docusign, says Anthony Halpin, founding partner and COO of Chicago Partners Wealth Advisors, a firm that has been helping Schwab test the digital onboarding process.

Digital onboarding has been a goal of Schwab Advisor Services since Andrew Salesky took over the digital advisor solutions team in 2018, and was originally promised for a 2020 release. And while the firm won’t attribute the release to technology capabilities it acquired from TDA, the ongoing integration process has sped up development efforts and allowed Schwab to leapfrog its original roadmap, according to Alison Dooher, Scwab’s head of advisor digital onboarding and client servicing.

“Integration has provided opportunity for acceleration,” Dooher said in a recent call with members of the media.

A combined team — offset somewhat by some rounds of layoffs — and ramped up resources have given Schwab significantly more capacity for development, Salesky says. Schwab is also in the process of incorporating some of the top features of TDA’s Veo technology platform, such as dashboarding capabilities, navigational improvements and a revamped iRebal.

“We’re spending in the digital space a level of investment that used to be the full portfolio of Schwab,” Salesky said. “There are benefits of scale in terms of the capacity to invest.”

Digital onboarding brings Schwab’s custody platform up to speed with others in the industry industry, such as Bank of America Merrill Lynch’s COBE released in May, says Alois Pirker, research director of Aite Group’s wealth management practice.

However, it isn’t a full solution for RIAs, who also need software for financial planning, reporting and CRM, Pirker tells Financial Planning. Schwab said it supports integrations with 180 third party technology vendors, but the quality of those integrations will ultimately matter more than the quantity, he says.

“[Schwab] still has work cut out to get to the level of integration that the RIAs will ask for,” Pirker adds. “Startup custodians are gunning for the smaller RIAs. TDA did a great job catering them, and Schwab historically was not as committed to them.”

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Small custodians, big business

April 1, 2021 3:35 PM

Despite the increasing competition from new custodians, Schwab is not feeling pressure on its bottom line, Salesky says. The fourth quarter of 2020 was the best quarter ever for Schwab’s custodian business, and the pace is continuing in 2021.

“We are really seeing unprecedented levels of growth,” Salesky says. “Yes there are competitors. There have always been competitors, and there’s always been upstarts, but our business is growing.”

“We are being appreciated by the market,” he says.