Schwab Announces Pricing, Service and Technology Initiatives to Boost Independent Advisor Growth and Efficiency

Thursday, June 25, 2009 9:00 am PDT



Public Company Information:


CARLSBAD, Calif.--(BUSINESS WIRE)--At a gathering of some of the nation’s largest independent investment advisors, Charles Schwab today unveiled a series of new initiatives designed to help them fuel their growth and add scale by managing costs and improving their efficiency.

In the challenging environment brought on by disruption in the financial markets beginning last year, many affluent investors are poised to establish new relationships with independent advisors but are hesitant to act during turbulent markets; at the same time, current clients of advisors are requiring more of their time, accelerating the need for greater efficiency in their businesses. On the occasion of its annual EXPLORE event, Charles Schwab, the leading provider of custodial, operational and trading support for more than 6,000 independent fee-based investment advisory firms announced a series of steps it is taking to support advisors in the current environment.

Beginning next month, Schwab will waive commissions on electronic equity trades and reimburse transfer of account fees charged by contra brokers for up to one year for new-to-Schwab clients of independent investment advisors who open accounts by the end of the year. In addition, Schwab Performance Technologies® will waive the next year’s maintenance fees for its portfolio management software PortfolioCenter® for any advisory firm that custodies client assets with Schwab Advisor Services and licenses PortfolioCenter through Schwab. More than 2,200 of Schwab’s advisor clients currently use PortfolioCenter.

Schwab is also investing in an array of new service and technology projects that will begin to benefit advisors by the end of the year:

  • A newly redesigned technology platform that integrates and centralizes the features of Schwab’s web site and the SchwabLink desktop application and helps advisors explore and use client data with greater flexibility;
  • Secure email functionality between select advisors and Schwab’s service representatives;
  • Operations consultants who will share best practices with advisors’ back-office staff to improve their productivity and efficiency; and
  • The debut of a new program offering classes to help advisor back-office professionals become highly proficient at managing custody, account servicing and operations processing.

A number of other longer-range technology enhancements are also in the works, including enhanced reporting technology and straight-through data file download and updates to PortfolioCenter. As part of Schwab’s commitment to open platform architecture, enhancements will also be made to data and services interfaces provided by other firms that serve the technology needs of advisors. Also in development is scanning technology that will enable advisors who rely on scanning technology to scan documents directly into Schwab’s workflow.

In announcing these initiatives, Jim McCool, executive vice president and head of Institutional Services at Charles Schwab, said, “It may still be stormy out there, but we see a silver lining for independent advisors, who continue to stand out from the crowd. The independent model is inherently different from the traditional Wall Street brokerage model and our advisor clients are well-positioned for the future as more wealthy individuals and families focus on those differences.” He emphasized, “As the leader in the custodian business for these independent advisors, with a 22-year track record and a very solid financial standing, it is incumbent upon Schwab to leverage our scale and strength on behalf of advisors.”

The independent model has become more appealing to investors seeking a change from large, wirehouse firms, many of which have been affected by business issues and financial challenges, said McCool. In January 2009, advisors told Schwab that nearly half of their new clients in the prior six months came from those firms, citing loss of trust as the driving force.

“Life’s finest opportunities often emerge from its greatest challenges, and while this year has been difficult for advisors, there has never been a better time for their unique brand of personal, long-term advice,” reiterated McCool.

According to Schwab’s 2009 RIA Benchmarking Study, 84 percent of advisors expect to grow aggressively or moderately over the next five years. However, after several years of 20 percent annual gains, revenue per client is expected to fall 25% from its peak.

“Advisors need to manage their costs without cutting back on client service and outreach,” said Bernie Clark, senior vice president of sales and relationship management for Advisor Services at Charles Schwab. “These moves are designed to strengthen their ability to do just that.”

Trish Cox, senior vice president and chief operating officer for Advisor Services at Charles Schwab, emphasized that new initiatives are additive, complementing Schwab’s recognized excellence and longstanding emphasis on service, consulting, and technology. “We’re immensely proud of our existing support for advisors, and at the end of the day our people really make the difference, but we expect these new developments to make a meaningful impact on their growth and efficiency,” she said.

Cox noted that more than 800 client service representatives with an average tenure of seven years support advisors who custody with Schwab. In the first quarter of 2009, 92 percent of Schwab’s advisory firm clients nationwide rated the service they received as excellent or very good. More than 2,000 advisors accessed its marketing and business development tools and resources in 2008 alone, and Schwab’s team of technology consultants participated in some 1,100 appointments with advisors last year.

“Advisors have a deep and abiding commitment to help investors succeed, and so does Schwab,” McCool told those in attendance at EXPLORE, which this year drew some 140 principals from independent firms across the country. “When you grow, Schwab’s business succeeds. Advisors play a central role in our own growth story,” he reinforced.

About Schwab Performance Technologies

Founded in 1985, Schwab Performance Technologies (SPT) is a subsidiary of The Charles Schwab Corporation and a leading provider of portfolio management and accounting solutions to more than 3,000 independent financial advisors and investment managers. SPT develops powerful portfolio management solutions to help advisors manage their practice and service their clients. PortfolioCenter and PortfolioServices are products of SPT. An open architecture firm, SPT is positioned to provide services to all independent advisors regardless of custodial relationships. SPT also supports third party outsourcing providers who use PortfolioCenter as the basis for their offering. More information is available at

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.5 million client brokerage accounts, 1.5 million corporate retirement plan participants, 567,000 banking accounts, and $1.2 trillion in client assets as of May 31, 2009. 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. Schwab Advisor Services is a business segment of The Charles Schwab Corporation serving independent investment advisors and includes the custody, trading and support services of Charles Schwab & Co., Inc. ("CS&Co"), a registered broker-dealer and member SIPC, and the portfolio management and accounting solutions of Schwab Performance Technologies (“SPT”). CS&Co and SPT are affiliates and separate subsidiaries of The Charles Schwab Corporation. More information is available at (0609-9627)

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Jim D. McCool, executive vice president and head of Institutional Services at Charles Schwab (Photo: Business Wire)

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