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Business-Like Schwab Party

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Throughout its 17 year history, the Schwab Impact gathering sponsored by Schwab Institutional has grown in size, ambition, and celebrity sightings. This year–the 20th anniversary year for the Schwab unit that serves RIAs–was no exception. Held in Las Vegas’s mammoth Mandalay Bay hotel from October 28-31 and attended by 3,800 people, it featured well-received lectures by Newsweek International’s Fareed Zakaria and by Bono, the humanitarian and sometime rock star, and a well-received concert by Sheryl Crow. In between those high-profile happenings, there was plenty of education and news going on.

On the news side, the winners of Schwab Institutional’s second annual Impact Awards were announced. Dr. Lewis J. Altfest received the Charles R. Schwab Impact Award from firm founder and chairman Chuck Schwab for his contributions over many years to the profession. Altfest’s day job is as president of the pioneering fee-only firm L.J. Altfest & Co. in New York, but he’s also a professor at Pace University in New York, a steadfast NAPFA member, and author, among other works, of the textbook, Personal Financial Planning.

The other winners (screened by Moss Adams and picked by judges Dede Pohl of IMCA, Marv Tuttle of FPA, David Tittsworth of the Investment Adviser Association, and former Schwab Institutional chief strategist Dan Leemon) were Abacus Planning Group of Columbia, South Carolina (Cheryl Holland’s firm; see October 2005 profile by Bob Keane) for the Pacesetter Award; Moneta Group of St. Louis for the Best-in-Business Award (Joe Sheehan of Moneta was featured in IA’s November 2007 cover story); and Friedman & Associates, Novato, California for the Best-in-Tech Award (for more on what Greg Friedman’s up to these days, see “Sign Me Up” ).

One of the highlights of past Impact shows has been a townhall meeting where top Schwab Institutional executives took unscripted and often tough questions from advisor attendees. That session didn’t happen at Impact 2006, but this year it came back with a twist: in addition to the head of SI, Charles Goldman, this sitdown featured the president and COO of Charles Schwab Corp.–Walt Bettinger.

In prepared remarks, Bettinger highlighted the “incredibly important role” advisors play in Schwab’s overall strategy, and that there’s been particular “validation within the past year of the relatively simple business model” of SI. In response to a question, Bettinger said “Schwab is an incredibly healthy company,” spurred by “almost completely organic” growth. He alluded to Schwab missteps in the past, and said while “Schwab has a short and storied history of discipline, we want to make it long and storied.” Speaking to the subprime mortgage issue and the credit crunch that followed, Bettinger pledged that “Protecting the value of money funds is paramount to us.”

Transitions of several kinds were clearly on the minds of the advisors who custody with Schwab during the session. When one advisor speculated over how long Chuck Schwab would remain at the helm of his company, Bettinger joked that “Chuck’s rate of aging is slower than mine.” He also pointedly complimented former Schwab Insititutional president John Coghlan for his outsized contribution to the growth of SI, and stated baldly “I’m here because of John.” In response to a question from an advisor who asked whether Schwab Institutional would itself consider buying up advisor firms, Goldman said “we’ve looked at that over the past six years,” but concluded that doing so would be “uneconomic and non-strategic.”

When it comes to financing advisors, Goldman admitted that Schwab is helping provide financing to wirehouse brokers going independent, and that “we’re considering providing financing” to advisors who are looking to acquire other firms, but noted that the economics of such lending could be “difficult,” giving the example of an advisory firm with $200 million in AUM that wanted to acquire a $400 million firm.

Finally, in response to an advisor’s observation that there seems to be a significant change–a very positive one–in the way that Schwab’s top management is speaking to its advisor clients, Goldman said that “over the last three years, we realized we had a responsibility to drive growth in the industry.”

The Human Capital Initiative

As part of its efforts to support its affilated RIAs deal successfully with one of the entire industry’s biggest issues–finding and retaining the best people for their practices–Schwab announced at Impact a new human capital initiative. Kelli Cruz, SI’s director of advisor practice management, said the offering encompasses a Web site with a number of HR tools, including 20 sample job descriptions; an enhanced career listing service that consolidates appropriate resumes from a number of online job sites, including and; an online compensation benchmarking tool powered by Moss Adams, and two compensation best practices white papers on compensation. Cruz asaid SI would continue to partner with associations like the FPA and colleges–like Texas Tech and University of California at Irvine, to which it gave an educational grant.–with Robert F. Keane


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