Schwab Expands Relationship with Morningstar to Include 401(k) Managed Account Services

Employers will have choice of managed account providers when implementing Schwab’s index-based 401(k) plan offer

Tuesday, April 23, 2013 7:00 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"Fund operating expenses for index ETFs are often lower than those of index mutual funds. We believe integrating ETFs into a 401(k) lineup can offer fund options that drive fund operating expenses down further and provide workers with the opportunity to save even more for retirement"

SAN FRANCISCO--(BUSINESS WIRE)--Schwab Retirement Plan Services, a Top 10 401(k) provider* to approximately 1.6 million workers saving through company retirement plans, today announced the addition of Morningstar Associates, LLC (Morningstar) as a managed account provider for Schwab Index Advantage®, an innovative retirement plan solution combining low fund investment expense1 with personalized savings recommendations and investment management designed to help workers better prepare for retirement. Morningstar Associates is part of the Morningstar Investment Management division.

Morningstar will join GuidedChoice as a fully integrated provider of managed account services to workers saving for retirement through Schwab Index Advantage. Employers will be able to choose Morningstar’s managed account services once the integration with Schwab Index Advantage is completed, which is expected later this year.

Long History with Both Providers

“We have a long history of offering both Morningstar and GuidedChoice 401(k) advice to participants in the traditional 401(k) plans we service. We are pleased now to be able to offer our Schwab Index Advantage clients a choice of these two advice providers,” said Steve Anderson, executive vice president, Schwab Retirement Plan Services.

“We are excited to be part of this innovative 401(k) offering. With Morningstar’s managed account services, participants can receive personalized savings and investment advice recommendations that we believe can make a real difference in helping them meet their retirement goals,” said Brock Johnson, president of retirement solutions for Morningstar Investment Management.

"The growth of Schwab Index Advantage shows strong market demand for high quality investment services at a low cost, including unbiased savings and investment advice using low-expense funds. The addition of Morningstar will continue to expand Schwab's reach and enable even more workers to receive professional management in their retirement plans," said David Bernard, chief client officer, GuidedChoice.

Schwab Index Advantage

Schwab Index Advantage integrates 401(k) features in a unique way to help workers save and invest for retirement. To help drive costs down, Schwab Index Advantage includes index mutual funds with low fund operating expenses instead of the often more expensive actively managed mutual funds found in many 401(k) plans. Focusing on simplicity, the program includes a professional, low-cost, independent managed account service that develops an ongoing personalized savings and investment strategy for individuals.2 Once the Morningstar services are implemented, employers will be able to choose Morningstar or GuidedChoice to provide managed account services to their employees.

The level of integration of the managed account services will be the same regardless of whether an employer chooses Morningstar or GuidedChoice for their plan.

Next: ETFs in Schwab Index Advantage

Schwab Retirement Plan Services is also developing a version of Schwab Index Advantage that will provide index-based exchange-traded funds (ETFs) in the investment lineup so employers will ultimately have a choice – index mutual funds or ETFs. Schwab expects to launch the ETF version of Schwab Index Advantage later this year. Morningstar and GuidedChoice both will be available for clients choosing the ETF version as well.

“Fund operating expenses for index ETFs are often lower than those of index mutual funds. We believe integrating ETFs into a 401(k) lineup can offer fund options that drive fund operating expenses down further and provide workers with the opportunity to save even more for retirement,” Anderson said.

Employers interested in learning more about Schwab Index Advantage should visit rethinkyour401k.com or call Schwab at 877-223-7036.

Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 300 offices and 8.9 million active brokerage accounts, 1.6 million corporate retirement plan participants, 888,000 banking accounts, and $2.08 trillion in client assets as of March 31, 2013. The company was ranked ‘Highest in Investor Satisfaction With Self-Directed Services’ in the 2012 US Self-Directed Investor Satisfaction StudySM from J.D Power and Associates. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com. (0313-2063)

Schwab Retirement Plan Services is comprised of Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company, which provide recordkeeping and related services with respect to retirement plans. Schwab Retirement Plan Services, Inc., Schwab Retirement Plan Services Company, Charles Schwab Bank, and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Brokerage products and services are offered by Charles Schwab & Co., Inc. Trust, custody and deposit products and services are available through Charles Schwab Bank.

About GuidedChoice

GuidedChoice is an independent investment advisory firm specializing in investment advice, managed account services and strategic solutions for corporate and public retirement plans, advisors and individual retirement plan participants in many of the largest defined contribution plans in the U.S. They are also the creators of the award-winning Financial Guidance Theory (FGT), developed for retirement income planning. For more information, visit www.guidedchoice.com.

GuidedChoice is not affiliated with Schwab Retirement Plan Services, Inc. or its affiliates.

About Morningstar Associates, LLC

Morningstar Associates, LLC is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. It is part of the Morningstar Investment Management division, which creates custom investment solutions that combine award-winning research and global resources with proprietary Morningstar data. With approximately $149 billion in assets under advisement and management, the Morningstar Investment Management division provides comprehensive retirement, investment advisory, and portfolio management services for financial institutions, plan sponsors, and advisors around the world.

Data as of Dec. 31, 2012. Includes Morningstar Associates, Ibbotson Associates, Morningstar Investment Services, OBSR Advisory Services, and Ibbotson Australia.

Morningstar Associates, Morningstar, Inc., and their affiliates are not affiliated with Schwab Retirement Plan Services, Inc. or its affiliates.

*Top 10 ranking by total 401(k) recordkeeping assets. PLANSPONSOR 2012 Recordkeeping Survey, June 2012.

1Low fund investment expense refers to lower operating expense ratios.

2 The savings and investment service provides participants with a retirement savings and investment strategy, a major component of which is a discretionary investment management service furnished by GuidedChoice Asset Management, Inc. ("GuidedChoice®"), an independent investment advisor. GuidedChoice creates discretionary managed portfolios based on Modern Portfolio Theory using investment alternatives available in the plan. GuidedChoice is not affiliated with or an agent of Schwab Retirement Plan Services, Inc. ("SRPS"), Charles Schwab & Co., Inc. ("CS & Co."), or their affiliates. Neither CS&Co., SRPS, nor their affiliates supervise, make recommendations with respect to, or take responsibility for monitoring the services provided to participants by GuidedChoice. Schwab Advice Consultants, who are employees of CS&Co. and not of GuidedChoice, facilitate participant access to the GuidedChoice services, but do not provide investment advice or recommendations regarding the GuidedChoice services or generally as part of the advice services. Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. There is no guarantee a participant's savings and investment strategy will provide adequate income at or through retirement. Fees are charged for the advice services, including its discretionary investment management service, based on the participant's account balance. Participants should carefully consider information contained in the disclosure materials furnished at the employer's direction regarding the services provided by Schwab and GuidedChoice, including information regarding compensation, affiliations, and potential conflicts. Schwab Retirement Plan Services, Inc., is currently implementing a similar independent savings and investment service that will be provided by Morningstar Associates, LLC.

Some of the statements may be forward looking and contain certain risks and uncertainties. There can be no guarantee of future performance. The views expressed are subject to change based on market and other various conditions.

Investment Products: Not FDIC Insured – No Bank Guarantee – May Lose Value

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© 2013 Schwab Retirement Plan Services, Inc., and/or its affiliates. All rights reserved.

Contact:

Charles Schwab
Mike Peterson, 330-908-4334
mike.peterson@schwab.com
or
Morningstar
Alexa Auerbach, 312-696-6481
alexa.auerbach@morningstar.com
or
GuidedChoice
Donna Lehman, 770-565-7275
dlehman@market-up.com

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