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Schwab’s Bernie Clark Urges Advisors to Evolve; Unveils Robo-Advisor Upgrades

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The annual Schwab Impact conference opened formally for the second year in a row with an actual advisor greeting the nearly 5,000 attendees on Tuesday, with Dale Yahnke doing the honors this year, welcoming advisors to his home town of San Diego. Yahnke, a founding partner of the big fee-only RIA firm Dowling & Yahnke, spoke of how rewarding he’s found the annual gathering of RIAs who custody with Schwab, and bearing in mind the theme of this year’s conference, encouraged attendees to “have great conversations” at the show.

Then Bernie Clark, head of Schwab Advisor Services, spoke to that same theme, serving as both cheerleader and Cassandra on the challenges and opportunities advisors face now and in the future.

Clark told attendees that conversations that build relationships are more important than merely finding solutions to problems, and encouraged advisors to keep asking questions of themselves and their clients. Just finding a conclusion to a presenting problem, he said, “can be fatal because we stop asking the questions,” which means “we stop trying to make things better.” After all, he said, the relationships that advisors build with clients is the “secret sauce” of their success.

As for Schwab, he promised it would keep evolving, and “if you’re growing, we’ll be here for you.” The need for evolution is paramount despite, and perhaps because, of the data showing RIAs growing at four times the rate of “traditional models,” aka the wirehouses “Those traditional models, he warned, “want to look like you.”

Advisors have to evolve as well because of the commoditization of many traditional advisor offerings such as asset allocation and portfolio construction, which means “estate planning is becoming critically important for your client base,” along with services like tax planning and career and life coaching.

As part of its support of advisors, Clark mentioned prominently two initiatives. The first is its Executive Leadership program, which he reported now has graduated more than 100 participants, and the success of its intern program (that program provides internships at Schwab itself before making its participants available to work at advisory firms; the executive leadership program was highlighted in an August 2015 Investment Advisor cover story.)

Then he spoke of Schwab’s national advertising campaign that highlights RIAs who custody with the firm, many of whom appear not only in those ads in publications like The Wall Street Journal and Forbes but also on the many pieces of signage surrounding the San Diego Convention Center, where Impact is being held. (Traditionally, Schwab competitor Fidelity often buys up billboard and airport signage during Schwab Impact shows; this reporter failed to find any such Fidelity signs this year in San Diego.)

As for other Schwab initiatives meant to increase the visibility of the RIA industry to investors and to meet advisors’ needs, Clark spoke of its offering since June to provide commission-free equity and ETF trades that advisors bring to Schwab through year-end; Schwab’s cybersecurity resource center and “consultative” cybersecurity offering, which he said would be rolled out to 20 more cities next year; and its advocacy in Washington on the DOL fiduciary rule and money market fund reforms, though he expressed some frustration with the SEC’s slow movement on third-party auditing of SEC-registered advisors.

Clark also mentioned Schwab Advisor Services’ supports of the financial planning programs at Texas Tech University, University of California at Irivne, and Virginia Tech, since “nothing is more important” than finding and supporting the next generation of advisors.

Clark, currently serving as chair of the Foundation for Financial Planning, mentioned that Schwab has donated more than $2 million to the Foundation, and that the company will match advisors’ donations to the Foundation up to $5,000 each through the end of 2016.

Then there is Schwab’s focus on “next-generation” digital advice platforms, notably its Schwab Institutional Intelligent Portfolios (IIP) robo-advisor. While noting that IIP remains a “work in progress,” he said that Schwab plans to roll out enhancements to IIP by year end. According to a Schwab press release, those enhancements will provide advisors with the ability to customize their IIP portfolios, and provide new account funding options and ways for firms to manage multiple IIP programs.

Finally, early next year Schwab said it will release an updated client-user app for smartphones and tablets, with the advisor’s brand, designed to provide a “more intuitive user experience.”

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