As the ink dries on Charles Schwab Corp.’s $22 billion acquisition of TD Ameritrade Holding Corp., the firms are contemplating the future of the combined tech stacks and how to best transition the technologies into a single platform for its advisers.
While the integration is slated to last upwards of a year and a half, Schwab executives have kept tight-lipped about the fate of TD’s VEO One — one of the industry’s most popular third-party tech platforms — even as they have announced integrations with other tools like TD’s thinkorswim, thinkpipes trading platforms and iRebal.
While some of the details are still unknown, the firms will come together to form a single integrated platform, according to executive vice president and head of Schwab Advisor Services Bernie Clark. “We will have a single platform at some point in the future, that I can assure you,” Clark said during a press conference on Tuesday marking the official close of the historic deal. “That will be the most efficient and best possible way we can grow in the future for advisers.”
“We’re open API architecture, so we have a lot of flexibility here,” Clark said. “What we expect to see happening here is that we will come out with that next generation platform as we go forward in adding things together — not breaking them apart.”
The idea behind such an open architecture approach is to enable the “best of both worlds” by giving advisers access to best-in-class vendor solutions via Schwab Advisor Center, in addition to Schwab’s own kit. However, it’s an approach that the competition, like Fidelity Investments, is taking as well, according to Will Trout, a senior analyst with Celent’s wealth management unit.
“Porting over much infrastructure from TD makes little sense in this context,” he said. “It’s somewhat ironic, of course, that TD Veo pioneered the idea of open architecture in the first place.”
TD Ameritrade first introduced its open-architecture technology with the launch of Veo Open Access in 2010, a platform that today offers advisers access to 180 third-party integrations.
However, analysts question whether repointing TD Ameritrade’s Veo One platform to a different custodial platform will prove viable or economical for Schwab.
“It took TD Ameritrade a lot of effort to build Veo One, and it might fall victim to the post-merger platform consolidation,” according to Alois Pirker, research director for Aite Group’s Wealth Management practice.
TD Ameritrade has also made enhancements to the platform over the past year including an AI-powered virtual agent for anytime service support; screen-sharing capabilities for advisers, clients and TD Ameritrade associates; streamlined access to loans; benchmarking tools; on-demand education resources; and fully digital new-account opening, according to a company announcement.
“Veo One is a true asset that allows TD Ameritrade to differentiate with and leverage for winning smaller RIAs that have less opportunity to integrate third-party applications themselves,” said Pirker. “Veo One not being available post merger would be a true loss for the RIA industry.”
What’s tricky is, despite the Veo One platform being beloved by advisers, adopting the platform is problematic from the standpoint of both economics and execution, said Trout.
“In operational terms, such an integration would be very heavy lift, and in truth, run counter to the technology tailwinds that are reshaping the industry,” Trout said. “These tailwinds revolve around the API and the ability to offer third party tools — in this case, through Schwab OpenView Gateway — with the proprietary tools that Schwab has spent years developing.”
Since porting the Veo One platform over to Schwab will be no small feat, it would make sense for Schwab to move forward with its own platform instead, according to head of Technology Tools for Today Joel Bruckenstein.
“Schwab will need to decide how many vendors are enough before they become oversaturated,” Bruckenstein said. “It makes sense for Schwab to incorporate TD tech when there is a demonstrated superiority on the TD side, but it is not like you can plug and play with this stuff — so it needs to be worth the investment.”
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