Schwab says the Justice Departmentapproved its deal with TD Ameritrade;
Plus, TD Ameritrade shareholdersvote on the deal; their two-thirds votesupporting it supersedes a Delawarelawsuit that aimed to block it.
Morgan Stanley says it is buyingE-Trade in a $13 billion stock deal.
Schwab says it plans to setup its new headquarters inWestlake, Texas, near Dallas.
June 4 Feb. 20 Dec. 2
Schwab and TD Ameritrade release asupplement to their joint prospectus/proxy to help resolve eight lawsuitsconcerning an “incomplete andmisleading registration statement.”
Schwab Stock Slices, which let retailclients buy partial shares of a singlestock or up to 10 stocks at once withno commissions, is launched.
Schwab completes $1.6 billionUSAA-related acquisition.
Schwab says Tom Bradley, the formerpresident of TD Ameritrade’s Retailand Institutional businesses, is set tojoin its Advisor Services in early 2020.
A Schwab SEC filing refers to asecond Justice Department probe intopossible antitrust issues with the deal;
Fidelity launches real-time fractionalshares trading of stocks and ETFs.
Jan. 29, 2020
RIAs: Past, Present & Future
When asked about how the Schwab-TD Ameritrade
deal broadly fits into industry’s history, Mark
Tibergien — the recently retired head of BNY
Mellon Pershing’s Advisor Solutions — didn’t
skip a beat: “It’s really important is to recog-
nize that the business of financial advice goes
through a transformation of material change
about every decade.”
In the 1970s, the discount brokerage emerged
with the elimination of fixed rate commissions,
Tibergien explained. In the following decades, there
was “the introduction of the independent-contractor
broker dealer and the disappearance of big-name broker-
age firms like E.F.Hutton, Smith Barney and the names you
remember from commercials — so vivid then, and now …
they don’t exist anymore.”
Schwab, TD Ameritrade and other discount brokers “made
such an incredible impact on the retail market that it was
transformational as well,” he said.
Today, it’s worth recognizing that “there is no real truly
branded fiduciary business — branded in terms of the con-
sumer market,” according to Tibergien. “There are some really
great firms, but none that you’d say would be [every]where in
the country … like Goldman Sachs or Merrill Lynch.”
The evolution of a branded fiduciary business model is
“pretty likely,” says the new board member of RIA Pathstone,
“but it’s probably going to take … the next decade or so for
that to occur,” he said.
The trend of some broker-dealers trying to eschew the BD
model in favor of the RIA channel “is probably a good idea
because their business has changed so much,” Tibergien
explained. “But not all of them
have fully embraced the idea
of fiduciary business.”
For that to happen,
“some things will have to
change inside their orga-
nizations,” he added. “As
an example, they’ll have to
rethink their compensation
model, because the way in
which they’re structured today
is very much based on sales.
They pay their people on a grid.”
While some investors and advisors
may think pay should be tied to performance, “Oddly, in
the RIA business, you don’t have to pay on a variable basis.
You can think in terms of how people are motivated to
do their jobs and pay them fairly and well,” he said. What
advisors do “doesn’t have to be a quid-pro-quo-type of
“The compensation model [at the BDs] will have to change.
The definition of what the deliverable is will have to change,
because the fees are based on assets. That probably will con-
tinue over the next decade, just because it’s an easier way to
price for the services,” he noted.
If there’s a lower rate of return in the market, like 2–3%,“that’s going to make it really hard to charge 80, 90 or100 basis points or more on a percentage of assets,”Tibergien said. “These kinds of things are going to be putunder pressure generally. The nature of reporting will have togo beyond the investment statements and get into things like