Before any deal could even be penned on the rumored biggest industry consolidation deal of the year, advisors were already fearing the impact the recently-announced Charles Schwab-TD Ameritrade merger would have on their businesses.

Some RIA owners view the potential pairing as bad news and a harbinger of declining service from a new, bigger Schwab.

“They are going to be diverting resources for this and they’ve already cut their resources,” worries Sheryl Rowling, a financial advisor and founder of San Diego’s Rowling & Associates, which manages more than $340 million in client assets and uses Schwab to custody funds.

The deal was widely reported Thursday to be in the region of $26 billion. Friday morning Fox Business's Maria Bartiromo was reporting that the deal was being held up over "internal conflicts and over leadership."

Schwab and TD Ameritrade teams also might not integrate well, Rowling worries. “There is a cultural difference between the two firms,” Rowling says.

As well as concerns about service levels, other advisors worry about custody as a whole.

Earlier this year the industry made major moves in its pricing structures by cutting commissions on trades to zero.

Schwab made the move first, eliminating commissions in October. The move was quickly followed by Fidelity and TD Ameritrade.

Ross Gerber, CEO of Santa Monica, Calif.-based Gerber Kawasaki Wealth and Investment Management, has more than $950 million under management. He sees numberous implications of the deal

"First, we’re losing [a] certain amount of competition because Schwab, LPL, and Fidelity all push each other to provide clients the best combinations of fees and service," Gerber says. "Clearly, TD cannot survive without being a bank because of the zero-commission movement, and so they wanted to sell their business to a bigger bank, a more diverse institution. It was probably a good move for TD, while Schwab is now the dominant player in the industry. We’re very curious to see the implications this [will] have for clients over time."

Scroll down to see breakdown and size of the custody marketplace

No one should be buying wedding presents for the two mega-custodian companies, warns Michael Wong, an equity research analyst and sector director for Morningstar, who issued a report about the possible deal prior to any formal announcement.

He has no expectations of clear sailing for the deal. “We anticipate multiple hurdles that will have to be cleared. There is definitely headline risk of antitrust, but we currently believe it’s surmountable,” Wong writes.

The roster of other firms with hundreds of billions to trillions of client assets — Fidelity, Vanguard, Bank of America and Bank of New York Mellon — overshadows the $5 trillion of retail brokerage and RIA assets that a paired Schwab and TD Ameritrade will have, thereby addressing antitrust concerns, Wong writes.

But he adds: “TD Ameritrade’s relationship with Toronto-Dominion Bank will take disentangling. Toronto-Dominion owns over 40% of TD Ameritrade, and will have to be brought into discussions. Not only does Toronto-Dominion have a large ownership interest, the insured deposit agreement between Toronto-Dominion Bank and TD Ameritrade that is a material source of revenue for TD Ameritrade will have to be negotiated.”

The $4 trillion RIA custody marketplace is dominated by four large players — Schwab, Fidelity, TD Ameritrade and Pershing — that account for close to 80% of the market, according to Cerulli.

According to Cerulli’s sizing models, Schwab is the largest RIA custodian with $1.55 trillion in assets under custody, followed by Fidelity with $932 billion, TD Ameritrade with $506 billion, and Pershing with $219 billion. The research firm adds a note of caution to these figures, saying “Major custodians typically report top-line asset figures, so this custodian sizing is Cerulli’s best effort to model and estimate just the assets custodied by RIAs in an opaque market.”

Get ready for a tooth-and-nail fight

Considering this deal brings together the largest and the third-largest player that together account for more than 51% of custodied assets, it will shake up the custodian marketplace for sure.

“Any M&A activity among these behemoths will only increase that concentration, reshaping the custody landscape and creating new opportunities to deliver services through economies of scale,” Cerulli adds.

Will Trout, head of wealth management at research firm Celent, thinks we are seeing the start of a "tooth-and-nail fight" between Fidelity and Schwab.

"We should expect the Big Two custodians to start charging advisors for custody services; in fact, I believe Fidelity is already charging RIAs for trade order flow," says Trout, who expects Fidelity to respond with some M&A of its own. "Maybe they’d buy E*Trade or TradePMR, for example?"

Fidelity later clarified that it does not accept payment for order flow.

The deal isn’t great for RIAs because Schwab will now have even less incentive to invest in technology and tools, warns Trout.

"Schwab sold off PortfolioCenter to Envestnet because they couldn’t make it work as a multi-custodial tool. Now they will start to be a lot more frugal with their advisor networks, and the RIAs, lacking real choice, will have to put up with it," Trout says, noting that Schwab recently cut all access to individual relationship managers for RIAs custodying less than $200 million.