Keeping up the business momentum evident in the closing months of 2006, Charles Schwab announced January 11 that its affiliated advisors now custody more than $500 billion at Schwab Institutional, up 23% from last year. That puts it halfway to SI President Debby McWhinney’s oft-repeated goal of having $1 trillion in custody by 2010.
Schwab Institutional, which is marking its 20th anniversary of serving RIAs in 2007, provided more than half of Charles Schwab & Co.’s net new assets in 2006–as of the end of November, Schwab had $1.22 trillion in total client assets.
To help achieve the growth envisioned by McWhinney, Schwab also announced January 11 an expanded program to help entice wirehouse brokers in particular to take the road to independence by providing a number of new and enhanced services, including financing, access to real estate services, and “preferred pricing” on errors and omissions insurance.
Barnaby Grist, managing director of strategic business development at Schwab Institutional, said Charles Schwab Co. will offer five-year commercial loans beginning at $100,000, priced at prime plus one, to advisors with at least $75 million in AUM. Called Schwab Advisor Business Loan, Schwab Bank will help determine the creditworthiness of applicants and will service the loan, “but we’ll take the risk here,” said Grist, since at Schwab Institutional, “we know advisors better than anybody else.” No payments will be expected in the first year, he said, helping advisors during that crucial time of starting their own firms.