in a deal that would create a brokerage behemoth with approximately $5 trillion in assets.
But at a time when trading fees are falling away, bigger might not necessarily be better.
“Any company, when you get to this size, is incentivized to push and move investors in the direction that’s most profitable, because they are a business,” said Lance Roberts, chief investment strategist of RIA Advisors, based in Houston, Texas.
Roberts emphasized he wasn’t criticizing Schwab if it tried to cross-sell self-directed investors on other services. All sorts of companies would do the same, he said.
Investors can prep themselves for that potential cross-sell — meaning, selling an additional product to an existing customer — by being clear on what money moves are best for them, Roberts said.
“As a retail investor, you’ve got to take some responsibility for your own money,” he said.
That’s especially important with a bear market looming at some point, he noted.
Representatives for Schwab and TD Ameritrade did not immediately respond to a request for comment.
If Schwab absorbs TD Ameritrade’s own zeroed-out commissions, it might have to make up the difference in other ways, observers said Thursday.
Retail investors playing the market by themselves might possibly see “an uptick in cross promotion of robo-products” like the automated Schwab Intelligent Portfolios, said Jen Butler, director of asset management and brokerage research at Corporate Insight, a market research firm.
“It remains to be seen how these robo-accounts endure a bear market,” Butler said, speaking generally about all algorithm-driven investment accounts. Some automated accounts mix in real-life advisors — like Schwab Intelligent Portfolios Premium — but others don’t.
Computer calculations might be cold comfort whenever a downturn occurs, Butler said. “You want to turn to someone, not just an algorithm,” she said.