Schwab account migration reminds us why Twitter whining should be taken lightly

Something changed and people on Twitter complained about it.

That sentence could apply to at least a dozen different things on any given day, but the culprit this time was Charles Schwab, which over Memorial Day moved retail trading accounts from TD Ameritrade to its own online brokerage platform. It was part of a phased migration announced in 2022 to finally bring over the business Schwab acquired in 2020 for $22 billion.

Of the 5 million accounts that moved, a few hundred people, or maybe thousands (if we’re being generous) used the social media platform to express disappointment. It’s a fraction of affected customers no matter how you slice it, but that didn’t stop some industry media outlets from treating the Twitter complaints as doomsday proclamations for Schwab and for registered investment advisors with client assets custodied with TD, which are scheduled to move over on Labor Day.

What were the complaints exactly? Well, that’s harder to pin down. Much of the resentment dissipated after a week, but most of the immediate reactions boiled down to variations of “Schwab’s app is bad, and I liked TD’s,” without providing much in the way of specifics. One such complaint cited by an industry publication was sourced to an anonymous Twitter account with just six followers.

That’s not to say there weren’t some pointed criticisms. The official accounts of both TDA and Schwab have been busy addressing concerns, such as the lack of certain features like live price tracking or discrepancies in account balances.

But a little perspective would be useful here.

First, people hate change. While it’s one of life’s only constants aside from death and taxes, the Harvard Business Review identified 10 reasons why people resist change, It’s one reason why wealth management firms still struggle to get financial advisors to adopt the new technology tools they invest in, as Practifi chief operating officer Emily Wilcox recently told InvestmentNews.

“People get so used to what they know, any kind of change can be really hard,” Wilcox said. “Training and education is only one part; you really need to get your team and your firm on the journey of understanding why the change is going to be valuable.”

There's also significant evidence showing that people are predisposed to negative emotions over positive, a phenomenon psychologists refer to as “negativity bias.” For example, someone is much more likely to vividly remember the snake they saw on the hiking trail for one second than the hours of beautiful, nonthreatening scenery.

This was important for human evolution, but when you combine it with resistance to change and the anonymity granted by the internet, it’s no surprise that Twitter is filled with more complaining than positivity. There’s research showing that negative sentiment spreads much better on Twitter than positive, but just think about how often people complain about bad airplane experiences (guilty!) compared with how often they praise an airline for safely transporting them thousands of miles through the sky. Or the way sports tweeters prophesized the death of baseball because of a pitch clock, before everyone just got used to it and moved on.

This has only been exacerbated under Twitter’s new verification system, which boosts the visibility of posts from paid subscribers over those from unpaid users, regardless of follower counts, making the site a less objective barometer of public opinion. A study of “finfluencers" recently found that those who tweet the most often broadcast the worst financial information.

Many people had no problem with the transition. Crystal Cox, a financial advisor and senior vice president with Wealthspire, said the change was “quite easy” for her client with a retail TD account, though that client also had some existing accounts with Schwab.

“They simply received a notice from TD via email, and then a few days later the funds arrived in an account at Schwab for them,” Cox said in an email.

George Papadopoulos, a fee-only planner who has firsthand experience with Twitter being less than trustworthy, has low expectations after “awful experiences” with two prior industry mergers. But the recent move of retail accounts has him feeling confident in Schwab’s ability to move RIA accounts from TD.

“If I judge from the flawless experience transitioning my daughter's retail Roth IRA to Schwab from TD Ameritrade, if it can be replicated, I would be ecstatic!” Papadopoulos said. “I must admit the communications and openness from Schwab on the transition have been great so far.”

A financial institution with $7.65 trillion in total client assets doesn’t need a technology editor to “white knight” for it, and the point isn’t that those negative Twitter reactions should be totally ignored. Schwab probably could have done a better job educating retail customers about the move. Schwab declined to comment on some specific client complaints — though a spokesperson clarified that it does, in fact, support joint accounts, contrary to some claims.

Nor did the company respond to questions about customer attrition. However, Schwab reported that net new assets in May totaled $20.7 billion and that total client assets remained flat from April, so it's unclear if Twitter whining is translating into meaningful amounts of lost business.

Schwab did say that the experience of the retail migration could make things smoother for advisors.

“We learned, for example, clients can help themselves if they establish credentials before conversion, enabling them to quickly resume accessing their accounts when the transition is complete,” a Schwab spokesperson said in a statement. “Some aspects of the advisor conversion will be different. While retail clients don’t always log in and transact every day, independent advisors run businesses and so require continual access to our tools, data, and people.”

The upcoming RIA move, with far more complex accounts and holdings, will have issues. It’s nearly impossible for a data migration of any size to be flawless, let alone one of the largest in history. Schwab has been managing expectations since last fall, and the company’s own model predicts 2% attrition from the merger.

“As in most things, it takes time to get used to something new,” the spokesperson said, adding that the firm encourages advisors to use the remainder of the summer to prepare for the migration.

The point is that it’s time for us to add several more grains of salt to the idea that Twitter reactions represent an accurate measure of consumer opinion.

Human nature is to fear change and remember the negative, but the sky isn’t falling every time it rains. Especially not on the bird app.