The Upcoming Transition to Charles Schwab

In 2019, TD Ameritrade accepted an offer to be acquired by Charles Schwab.  The merger took some time to receive approval from the government, and the two companies have been operating separately but under the same ownership.  After the approval was given, they have been planning how to combine the two companies into one.  Over the upcoming Labor Day weekend, all TD Ameritrade accounts will be converted into Schwab accounts.

Although Spinnaker does not have a formal relationship with TD Ameritrade or Schwab in the sense that we do not represent or receive any compensation from either company, we have elected to use TD Ameritrade as the custodian for our clients’ accounts.  They execute the transactions that we initiate, and they hold the funds, giving an extra layer of protection to our clients.  Schwab functions very similarly to TD Ameritrade, and we look forward to working with them.  As an independent Registered Investment Advisor, Spinnaker is not captive to any custodian and could move to alternative custodians if we deem it to be in the best interest of our clients.

So, what should you expect from TD Ameritrade and Schwab during the next few months?  Let’s talk about the details as it pertains to your experience as the account owner.

New paperwork – The transition to Schwab will occur automatically.  There is no new paperwork that you’ll need to sign to establish new accounts at Schwab or transfer your account holdings from TD to Schwab. This will all occur automatically.

Transition dates – The last date to transact with your TD Ameritrade account is Friday, September 1^st.  This is the last time to contribute or withdraw cash, trade securities, or look up your account values on TD Ameritrade’s website, advisorclient.com.  After the Labor Day holiday weekend on Tuesday, September 5^th, your account holdings will be accessible at Schwab. 

Repeatable cash withdrawals – If you have scheduled monthly, quarterly, or annual cash withdrawals from your TD Ameritrade accounts, these will continue as scheduled from your new Schwab accounts.  The same applies to Move Money authorizations that allow Spinnaker to send cash from your brokerage accounts to your bank with your verbal authorization as long as they have been used in the past three years.  These authorizations will continue for occasional and unscheduled withdrawals.

Advisor Authorizations – The authorizations you set up with your TD Ameritrade accounts will be the same for your Schwab accounts.  These may include the authorization for us (Spinnaker) to buy and sell securities on your behalf and to deduct our fees directly from your account.

Account history – Schwab will keep and have available online the cost basis for your taxable accounts and ten years of account statements, seven years of tax documents, two years of trade confirmations, and four years of check images.

Beneficiary Designations – The people or organizations that you have named to receive your accounts in the event of your death will remain the same with your new Schwab accounts. 

Debit Cards and Third-party payments – If you have used your TD Ameritrade debit card in the last 24 months, Schwab will mail you a new one. If you have set up automatic payment of bills from a TD Ameritrade debit card through your providers, these payments will not continue after September 1^st.  You will need to change your payment method for each of these businesses. 

Check writing - If you have written checks against your TD Ameritrade accounts in the last 24 months, Schwab will mail you new checks to be used after the conversion of your accounts.

September monthly statements – You will receive two monthly statements for the month of September for each of your accounts, one from TD Ameritrade and one from Schwab.  The TD Ameritrade statement will show a beginning balance and show the transfer of the holdings out of the account on September 1^st with an ending balance of zero.  You will also receive a monthly statement from Schwab showing a beginning balance of zero, followed by the transfer of securities into this account and an ending balance.  If you are prone to bad luck, you will likely receive the zero-balance statement from TD Ameritrade first.  Please don’t panic if this happens.  Just wait for the Schwab statement to show up. 

2023 Tax Statements – Each account with taxable income during 2023 will report the taxable events on up to two tax forms per account: one from TD Ameritrade and another from Schwab.  The TD Ameritrade tax form will cover taxable events from January 1^st to September 1^st, and the Schwab tax form will cover taxable events from September 5^th through December 31^st.

Importing tax data – Each tax statement (such as a 1099) can be uploaded to many tax preparation software vendors, such as TurboTax; however, the process is different between the TD Ameritrade statements and the Schwab statements.  The TD Ameritrade statements can be uploaded by providing the account number and the document ID number listed on the tax statement.  The Schwab tax forms can be uploaded by providing the user ID and password and updating the preference to share tax information with your software provider.

Electronic statement and trade confirmation preferences – Your monthly statement and trade confirmations will continue to be sent to you in the same way they are now.  That may be paper or electronic.  If you want to change these preferences, let us know and we can help you update your settings.

Online access - TD Ameritrade’s client portal, advisorclient.com, will only show account data up to the conversion date.  After the conversion, you can log into Schwab’s portal called Schwab Alliance to view your up-to-date account information.  To access Schwab Alliance, log into Advisorclient.com after the transition, and you will be prompted to set up your login credentials.