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Schwab RIAs to Benefit From OptionsXpress Acquisition: Bernie Clark

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Charles Schwab Corp. said Monday that it has agreed to acquire Chicago-based optionsXpress Holdings for Schwab stock valued at $1 billion.

In a statement about the deal, Schwab CEO Walt Bettinger characterized the acquisition as particularly benefiting Schwab’s “active investor clients” and other high-net-worth Schwab clients, noting that options investors at Schwab “tend to be among the larger, more active and longer-standing of our client relationships.”

With the acquisition, Schwab said it will offer a “best in class trading platform” for its retail clients.

In an interview Thursday, Bernie Clark, who heads Schwab’s RIA custody unit, Schwab Advisor Services (SAS), said that while the acquisition had not yet closed, when it does it will benefit its affiliated advisors as well as Schwab’s retail clients. Schwab said in its Monday announcement that the closing is expected to take place by the third quarter of 2011.

“We’re not going to talk in detail,” Clark (left) said, referring to the fact that the deal hasn’t closed yet, but suggested that advisors “look at what optionsXpress does, look at their expertise” in equity options trading and research, and education. “It will all be available” to advisors, Clark said, and anticipated that “eventually we’ll have integration.”

OptionsXpress has $7.8 billion in client assets and 379,000 accounts through which its customers trade equity options, futures and foreign exchange on one of three platforms: Web-based, desktop and mobile.

With the acquisition, Clark said Schwab has “checked an important box,” and suggested it would be “very additive, like Windhaven.”

Clark was referring to Schwab’s acquisition for $150 million in August 2010 of  Windward Investment Management—now renamed Windhaven Investment Management—an advisory firm that at the time managed nearly $4 billion in three separately managed account portfolios comprising mostly ETFs.

On Wednesday, Schwab made good on its promise to make three of those ‘Windhaven Portfolios’ SMA portfolios available to Schwab clients. At the time of the acqusition, Schwab had said that it would waive transaction commission costs for Windward managed accounts custodied on the SAS platform.

Last fall, Clark sat down for an extensive interview in San Francisco that formed the basis of Investment Advisor's November 2010 cover story.


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