Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
At the end of 2020, Charles Schwab completed its acquisition of TD Ameritrade. This means big changes for customers of TD Ameritrade. As the transition nears completion, all customers at TD Ameritrade will have their accounts moved over to Schwab. The process has already begun, with several tranches of TD Ameritrade accounts being migrated in the first half of 2023.
It’s not just TD Ameritrade customers who will be affected. Existing Schwab customers will also see some platform changes over the coming months. Here’s what to expect.
What Investors Need To Know
While most of the work will happen behind the scenes, there will be some impacts to existing client accounts along with new service offerings. Schwab investors can kick back and relax – there will be no direct changes to their accounts. Over time, enhanced client experiences will be available to Schwab clients, including TD Ameritrade’s popular thinkorswim® trading platform.
TD Ameritrade customers will be much more impacted by the merger. All TD Ameritrade clients will have their accounts completely migrated to Schwab’s platform. This includes being given new account numbers, logins and a totally new interface.
Rick Wurster, president of the Charles Schwab Corporation says all of this should lead to a better experience for both Schwab and TD Ameritrade clients. “One of the exciting parts of our conversion is the combined capabilities for our clients. We’ve invested in our web and mobile experiences at Schwab to ensure we have the best of the features and functionalities of both firms. Our former Ameritrade clients will have access to the full spectrum of portfolio and wealth management solutions that we have had at Schwab.”
While the merger of these two firms was allowed to proceed by the Department of Justice after an antitrust investigation, there is a pending suit looking to undo the transaction filed by three Schwab customers. The suit alleges that the deal will lessen competition as well as gather a monopoly in payment for order flow. Schwab has strongly denied these allegations.
Will Offerings Stay the Same?
Offerings for the most part should stay the same, but there will be some account changes that should hopefully improve the experience and benefit both Schwab TD Ameritrade customers.
One offering that TD Ameritrade clients will continue to keep but Schwab customers will get access to is thinkorswim, a trading platform for self-directed investors. It includes a whole host of capabilities, including customizable interfaces, technical analysis and charting tools.
According to Wurster “Thinkorswim is one of the crown jewels of Ameritrade and it’s widely considered to be the premier trading platform in the market today, with its unique combination of powerful tools and dedicated service from experienced trading professionals, alongside education for all levels of experience.”
TD Ameritrade customers in turn will have access to Schwab’s offerings, such as Schwab Stock Slices®, which allows investors to buy fractional shares in certain stocks.
They’ll also have access to Schwab’s branch network of over 400 locations across the United States and the United Kingdom. “The branch network experience includes providing access to planning wealth management capabilities that were not a focus of Ameritrade,” says Wurster. “We believe that will help Ameritrade clients consolidate at Schwab, rather than rely upon a second firm.”
Will Fees Stay the Same?
TD Ameritrade clients will actually have a reduction in fees than what they have been paying, including much lower, even free, trading costs. This change is already in effect. All retail clients will have “Schwab’s competitive pricing, representing our true no trade-offs approach,” says Wurster. Schwab offers higher interest on their cash sweep program as well, allowing investors to earn more on their cash.
What Do TD Ameritrade Customers Need To Do?
Schwab is on track to migrate all remaining TD Ameritrade accounts by 2024 according to Wurster. Two transition groups have been completed as of May 2023, with two more planned this year in September and November. The final group will be completed in the first half of 2024.
What To Do Before the Transition
Most of your information and settings will transfer, but not everything. If you’ve been using tools like local watchlists saved to a mobile device, you’ll want to export your information before the transition. All other watchlists should transfer over.
Download any secure messages and a detailed order and balance history for your records. You’ll also want to complete any education courses you’ve enrolled in as your progress will not transfer.
Certain types of open orders will also be canceled. Conditional orders, trailing stop orders, and directed routed orders will not transfer over. If you have any of these on the books, save your information once you get a notification of the transfer.
What To Do During the Transition
TD Ameritrade customers will be notified three months prior to their move to Schwab. Customers will be notified by email along with website and app alerts. Account transfers will be completed over a weekend to minimize trading interruptions. Once your account has been transferred, you’ll be able to set up a Schwab account and password.
This transfer means that you will have a new account number, so if you’ve been using your TD Ameritrade account to send or receive money, you may need to change your payment instructions. You’ll need to update your new account information anywhere you have your TD account on file. This includes bank transfers, bill payments and payments from a third party.
Generally any instructions set up at TD Ameritrade will transfer to Schwab, but it’s recommended to review your information to make sure it was rolled over correctly.
If you are using any third-party data aggregators, such as Quickbooks or Mint, you’ll need to reestablish a new link with your Schwab credentials. If you’ve given someone else authorized access to your account, such as a Limited Trading Authority or Power of Attorney, they should continue to have access once your account has moved to Schwab. They will need to create their own Schwab login and password.
However, anyone that hasn’t been set up under an authorized role, such as an account inquiry role, will need to have their access re-established.
What To Do After the Transition
For taxes, TD Ameritrade customers will receive double the number of tax forms when filing their 2023 taxes. Tax forms (1099s) will be issued both from TD Ameritrade as well as Schwab. After the 2023 tax season, all tax forms will be issued by Schwab. There should be no other major tax implications from this merger since all assets will be transferred in-kind.
Moving forward, TD Ameritrade customers will be able to access up to ten years of historical documents, including statements, tax forms and trade confirmations. They’ll also have their realized gain/loss data from the past two years and up to four years of transaction history.
How Will Investing With Schwab Differ From What I’m Used To?
The biggest adjustment for TD Ameritrade customers will be Schwab’s account management and trading platform. For accounts that have already transitioned, the platform’s interface seems to be the main friction point. Complaints on Twitter have mostly focused on Schwab’s user interface being a much different experience than what was at TD Ameritrade.
If you’re worried about losing access to thinkorswim when your account moves to Schwab, fear not. Any accounts currently trading with the thinkorswim platform will not be moved until after it moves to Schwab, so there should be very little (if any) interruption. This is expected to be completed toward the end of 2023.
While this merger will create some short-term headaches for TD Ameritrade customers, it will hopefully have a net positive impact in the long-term.
