From the November 2008 issue of Investment Advisor • Subscribe!

Safe and Sound

Sidebar to Cover Story: "Stepping Up"

Our role, says Charles Goldman, is to "provide safety and soundness of clients' assets" for the advisors who custody those assets at Schwab Institutional (SI). Speaking on September 25, Goldman, the executive VP who runs Schwab Institutional and oversees its 3,500 employees, said that beyond being "safekeepers" for Schwab's retail, corporate, and RIA assets, the custodial arm of Charles Schwab is "focused on serving RIAs and helping them grow their business; if we do, they'll be rewarded, and we will, too." Noting that $10 billion in net new assets were brought to SI in 2007 from advisors turning independent--aka, breakaway brokers--"this year, we've beaten that already," and Goldman expects to see continued "very significant growth" from that segment of brokers with an entrepreneurial streak. The average broker coming over has $100 million in assets, he said, joining the 5,700 RIAs who already custody at SI. In the aftermath of the crisis, Goldman expects the regulatory environment to "change dramatically," though he would think it "unfortunate" if broker/dealer regulation in the form of FINRA compliance is applied to RIAs, which are "so distinct."

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