This content is from: Wealth Management

Hours on Hold, Asset Purgatory, Errors: Frustrations Mount With TD Ameritrade as It Folds Into Schwab

RIAs say TD Ameritrade Institutional’s customer service began deteriorating in December. Is it darkness before dawn, or a preview of what they can expect after the merger?

Thursday evening, Michael Baker asked on Twitter: Had customer service at TD Ameritrade Institutional, the custodian to thousands of RIAs, “fallen off a cliff”?

Baker, a manager and co-founder of Vertex Capital Advisors in Fort Mill, S.C., does not usually go to the “Twitterverse and put anybody on blast.” But he felt compelled to air his recent frustrations to his followers — and directly at his custodian. The advisor also genuinely wanted to know if other RIAs were experiencing similar issues.

He discovered some have and they were fast to publicly commiserate with him. “They are awful lately,” one advisor replied, in reference to the custodian’s customer support. “Double check everything they do.”

Beginning in December, wait times to speak to a customer service representative at TD Ameritrade Institutional have extended to as long as 45 minutes. Processing times for assets to transfer, or documents to change status, have elongated to a week or more. An increasing number of forms that advisors submit to the custodian to initiate changes to accounts are returned, unexplainably labeled “not in good order,” a correspondence that advisors often refer to as a “NIGO.” 

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In less common (but more worrisome) instances, the custodian has made errors that could have damaged a client relationship, advisors told RIA Intel.

“I think things really took a nosedive in December. We noticed significant changes in processing times and call wait times, or we’re having to call back multiple times, to get an issue addressed or resolved,” Baker said.

In one case, it took more than two weeks to transfer assets for one client of Vertex Capital Advisors, jeopardizing the purpose behind the transfer. Baker reached out to TD Ameritrade during the delay and found himself speaking to a “fantastic” representative. Her demeanor was great, but she was powerless. The representative told him the custodian was “really backed up” and that the queue was the queue. No requests could be expedited, Baker was told.

Another client wanted to increase the amount of money automatically saved to their investment account, so Baker submitted a form to TDAI. Two days later, the request wasn’t completed. He double-checked the submission and found the increase was not being made in place of the old, automated contribution, but in addition to it. The client had gone from a small increase to almost doubling it “and this was not a small amount of money,” Baker said.

Had Baker not checked the pending request, he said an error like that by TDAI could have jeopardized the client relationship. When things go wrong “who do you think the client is upset with? The person closest to the client feels the heat.”

A service representative told Baker he read and submitted the form incorrectly and blamed him for the new automatic contribution overlapping an old one. It was the first time the form had been explained to Baker that way in eight years. “The form, then, is poorly ambiguous, if that’s true,” he said.

Baker acknowledges that errors and delays happen, especially during busy times. But the new frequency and severity of problems, and lack of communication about the deterioration, are what moved him to speak out on a custodian he’s otherwise been happy with. Since he publicly raised the question about TDAI’s customer service, Baker said the company has reached out to him. But “we are clearly not the only ones in that boat,” he said.

Other RIAs have experienced similar issues. More than a dozen advisors sympathized with Baker on social media and shared their own issues with TDAI, as well as some other custodians. In messages to RIA Intel, four additional advisors, who asked to remain anonymous for fear of harming their relationship with TDAI, said they had experienced similar problems.

Another RIA in Los Angeles, who also asked to comment on their experience with TDAI anonymously, said they didn’t mind waiting on hold for a few minutes. They understood there might be certain times of the day and year when call volumes are higher than normal. But in recent weeks, they have received unusual NIGOs for forms and spent more time waiting on the phone. Those minutes quickly add up to precious hours for a solo-advisor practice. “I don't really have a problem holding for a little bit. But when it starts to be 10 to 15 minutes, that really gets on my nerves. And going beyond 30, 40 minutes, that’s ridiculous.”

“I feel like they’re just NIGO’ing stuff [because] they’re understaffed. I’ve had multiple times [where] they’ve marked stuff wrong simply because they read it too fast or overlooked something,” an advisor suggested online

Matt Fizell, a financial planner and the Operations Manager at Guiding Wealth, has used TDAI as a custodian for four years. At the start of 2021, he noticed wait times to speak to a customer service person were extending past 30 minutes, more than twice as long as he typically waited in the past. Reaching customer service doesn’t guarantee a problem will be solved on that call, either.

“It’s such a toss-up. You never know when you get in touch with someone if they are going to be good,” he said.

Unexplainable NIGOs didn’t surprise Fizell. “That’s not a new issue, that’s always been how TD Ameritrade has done things.” In his experience, it is common for a new customer service representative to erroneously NIGO a form. 

Fizell tries to be empathetic to the person on the other end of his calls. Like millions of workers, call center employees are likely working from home due to the Covid-19 pandemic and trying their best under the circumstances they are in, he said.

How pervasive the service issues are among TDAI's more than 7,000 custody clients is unknown.

In a statement to RIA Intel, TD Ameritrade acknowledged that it had received a higher volume of calls at the end of 2020 than it anticipated. The company did not refute any claims made by advisors or say when RIAs could expect service to improve. It did not say whether any changes in service quality were related to its acquisition by Charles Schwab, which bought the competitor for $26 billion, creating a financial services firm with $6 trillion in assets and custodian to more than 10,000 RIAs.

“We’re fiercely committed to a superior service experience for all of our advisors. Year-end volumes have been higher than anticipated, so we’re working diligently and allocating resources to deliver the level of service that advisors know to expect from us,” TD Ameritrade said.

Charles Schwab did not respond to requests to comment on this story, including whether TDAI’s service issues were at all related to the merger. In a wealthmanagement.com story Friday, Schwab acknowledged its own service issues in recent months, a “result of a confluence of challenging factors but, importantly, they are not due to the ongoing integration of Schwab and TDAI.” 

More than 7,500 RIAs custody client assets with Schwab whose customer service hotline fields three million calls each year. In February last year, Schwab had 600 customer service representatives and revealed that it had partnered with a third-party artificial intelligence company to help it analyze phone conversations with RIAs in 2019 — an effort to improve its service. At the time, Schwab said that 30% of inbound calls were so complicated they required “senior enhanced specialists.”

Smaller RIAs tended to favor TD Ameritrade and some expressed concern about their future as a part of Schwab. To ease some concerns, Schwab hired a well-liked former president at TD Ameritrade. But Schwab has begun dissecting TD Ameritrade even though the deal hasn’t closed. Executives have been upfront that the deal “has to be more than one and one equals two.

Last year, Schwab also laid off 1,000 employees, or about 3% of the combined workforce of Charles Schwab and TD Ameritrade, and said it expects to eliminate more jobs in 2021. 

Along with recent service issues at TDAI, RIAs are unhappy with the lack of communication from the company. They received a standard note from the custodian near the end of the year reminding them of certain deadlines. But, to their knowledge, no explanations or updates have been sent broadly about customer service. RIAs don’t know why the custodian’s service has been poor or when they can expect it to improve. 

“I won’t point the finger at the Schwab-TD merger because, the truth is, I don’t know. I don’t know what is going on behind the scenes,” Baker said.

Advisors have been left wondering if the poor service in recent months represents what they can expect in the future, from TD Ameritrade or from Schwab once the merger is complete. Schwab has promised the transition will be smooth and service, if anything, will improve.

Despite recent headaches with TD Ameritrade, Fizell said the overall experience with the custodian was a good one. There hasn't been any discussion about switching custodians. Although, that is partly because Schwab already made that de facto choice for his RIA when it bought TD Ameritrade. 

Guiding Wealth sees the merger as an opportunity to test drive another custodian. Whether customer service will improve, be similar, or worsen, they’re waiting to see. 

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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