'We have to rebuild': Billion-dollar firm execs contend with tech challenges of Schwab-TD deal

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ORLANDO, Fla. — While small advisors may be most at risk of service disruption in a potential Schwab-TD Ameritrade deal, billion-dollar firms aren’t immune, particularly as it relates to their tech stacks.

“I think you all may be in a bit of denial,” said Joel Bruckenstein, a technology consultant and founder of the T3 Conference. He moderated a panel composed of three executives at RIAs managing approximately $1 billion or more in assets.

The executives said they had had concerns — within certain parameters.

“It does change everything,” said Teri Shepherd, president of Carson Group. “But not for our advisors and clients ... It’s us. We have to rebuild and do everything.”

Shepherd, who participated in the panel with Heather Fortner, Chief Compliance Officer of SignatureFD; and Shannon Spotswood, president of RFG Advisory, agreed on one thing: There’s a lot of work — and unanswered questions — ahead.

Top of mind: What will become of TD Ameritrade’s open architecture Veo One platform, the central hub for tech vendor integrations for RIAs custodying with the firm? Carson Wealth custodies over $5.7 billion at TD Ameritrade; Atlanta-based SignatureFD has over $1.8 billion in client assets at Schwab and over $800 million at TD and RFG Advisory has over $900 million at TD Ameritrade and a little over $22 million at Schwab.

“Watching how those [custodians’ tech platforms] come together and the implications for Veo One are the most important questions to answer this year,” said Spotswood. Both she and Shepherd highlighted that TD Ameritrade has brought a lot to the table via significant investments into technology, such as artificial intelligence, fintech integrations and APIs.

Technology consultant Joel Bruckenstein discusses industry consolidation with Heather Fortner, Chief Compliance Officer of SignatureFD, Shannon Spotswood, president of RFG Advisory, and Teri Shepherd, president of Carson Group, on a panel at TD Ameritrade LINC.

Spotswood also emphasized that, while RFG Advisory is multi-custodial, “you have several thousand advisors at TD who rely on Veo as their tech stack. It’s going to be disruptive.”

Bruckenstein suggested that the deal may reduce fintech providers’s innovation.

“When a vendor starts out, they need to get access to a custodial platform — It’s absolutely central,” he said, adding later: “Where has every new entrant in the last decade gotten their first custodial experience? Right here at TD.”

The acquisition, expected to close in the second half of 2020, has changed the outlook at SignatureFD, according to Fortner.

“We've literally had to shift our mindset in the sense that it is a potential option of every single company we work with to get bought,” she said. “You don’t think about these things … But [the day] has come. It has arrived. That train has pulled into the station.”

Bruckenstein reminded the audience that there’s more than the TD Ameritrade acquisition to keep in mind: Orion Advisor Services is also up for sale.

“It’s not as if we have nothing else to worry about,” he said.

While Envestnet purchased MoneyGuidePro and Fidelity bought eMoney, Spotswood wondered whether an outside firm would buy Orion.

“The players and who you’re working with are going to change, so you have to have confidence and a level of comfort in understanding the technology and understanding how all those pieces are working together,” she said.

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TD Ameritrade’s Tom Nally revealed that and other key details as the two firms press ahead with a proposed acquisition.

Although panelists pointed to what they regarded as successful deals made in the past, such as TD Ameritrade’s purchase of iRebal, Bruckenstein asked skeptical questions.

“For every one of those [acquisitions] you point to that worked out well, I can point to one that didn’t,” he said, noting that cultures often don’t mesh well.

What’s the most important thing advisors can do to ensure a seamless transition into the newly merged firm? Make sure they have access to all their client data so they can use multiple major platforms and aren’t bound to one company, Shepherd said.

All agreed one thing is certain: The industry is changing.

“I’ll be honest. I do spend a lot of time staring at the ceiling and thinking about consolidation in the industry,” Spotswood said.

Amid the evolving landscape, RIAs need to be stable, according to Shepherd.

“As everything shifts in our space, we want to remain constant.”

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