Just a quick note as we slide into the Thanksgiving holiday.
If you follow financial media at all, you probably heard the recent news about Charles Schwab buying TD Ameritrade in a $26 billion all-stock deal.
Because we custody assets for many clients at TD Ameritrade (a custodian is a financial institution that holds securities for safekeeping in order to minimize risks associated with theft or loss), some have asked what this deal will mean for them. This brief letter is meant to help answer some of those questions:
- The deal is not final. Although Charles Schwab announced plans to buy TD Ameritrade, the deal has yet to be approved by antitrust regulators. This means it is too early to speculate about what the terms will specifically mean.
- It will take time. Pending regulatory approval, the integration of the two firms is expected to take 18 to 36 months after the deal is closed. This means it will likely be a significant amount of time before any of our clients will be affected by this merger.
- There may be advantages. Some analysts believe the combined firm may be able to cut costs, stream new revenue opportunities and improve the platform. Only time will tell.
- At the end of the day, Schwab and TD Ameritrade are waaaaayy more alike than they are different. We’ve had long relationships with both vendors and are comfortable with both platforms. TDA has better pricing and better technology, but Schwab does a better job with international transactions. It’s not dissimilar from Boeing vs. Airbus, Ford vs. Chevrolet, Yankees vs. Red Sox – some like one and some like the other. We’re hoping the best of both platforms rises to the top in the new, combined entity.
The long and the short of it is that it is business as usual – no material changes now, and likely nothing too significant when and if the merger goes through later next year or the following. Perhaps the monthly statements look different, or we all get new website logins, but our investment philosophy doesn’t change, our holdings don’t change, and our independence as a firm doesn’t change. But we’ll certainly keep you apprised as more concrete details are rolled out in the coming months.
Thank you for the confidence you have placed in our firm. We consider it an honor and a privilege to serve you.