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Schwab: Digital Onboarding, Money Transfers Surge Amid Pandemic

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Schwab Advisor Services is seeing digital adoption of its onboarding and other technology tools increase even faster among advisors amid the ongoing COVID-19 pandemic, company executives said during its latest Technology Tuesday conference call with reporters May 5.

“We’ve been seeing digital adoption steadily increasing continuously over time,” according to Lauren Wilkinson, vice president-Digital Advisor Experience at Schwab Advisor Services. The company was “seeing an increasing trend for several months, even before the current shelter in place situation,” she said.

However, in the past six to eight weeks, advisors have made a “dramatic shift” even further towards adoption of digital workflows, she said. The pandemic has “certainly raised the urgency for many businesses to be working in a … virtual digital environment because both advisors and their clients want to avoid in-person interaction and actually need to avoid in-person interaction,” she told reporters.

The “critical needs” that advisors have include “being able to create scale and efficiency to meet increased demand and work virtually, and then also to just create a “positive experience for clients,” she noted. Therefore, it is “hard to underestimate the significance of this change in my mind, which is really a historic opportunity, where both advisors and their clients are getting more comfortable working digitally,” she said, predicting “this is something that will stick.”

Despite the increased need for digital adoption, “we know it’s not as easy as just turning a switch and digital adoption happens,” she conceded. After all, “behavioral changes, operational changes and education for both staff and client” are all needed, she said.

“Looking ahead, the industry is definitely moving to new standards of best practice when it comes to working digitally and we think that’s a good thing for both clients and advisors,” she added.

Schwab has been “seeing increased adoption really across the board” with its digital tools, she went on to say. That includes advisors coming directly to the Schwab website for digital capabilities, as well as taking advantage of Schwab’s third-party integration, she noted. Over the last couple of years, the company has “really expanded that third-party integration offer and we now have 140 third-party integrated products across” Schwab’s digital offerings, she said.

Digital Account Open

Schwab’s Digital Account Open tool and onboarding “remain our largest investment,” Wilkinson told reporters. Over the last several months, Schwab saw increased adoption of the tool, which enables advisors to efficiently and securely open a client account in minutes, without faxing or wet signatures.

That increased adoption of Digital Account Open only spiked further in the past six to eight weeks, Wilkinson said, noting that over a third of Schwab’s advisory firms have adopted the tool. “For advisors who are using the Digital Account Open experience, they really see significant benefits,” she said.

For one thing, for advisors using that tool, the “not in good order” rate has tumbled from an average of about 30% to the low single digits,” which “alone is just a significant benefit,” she said. It is also the fastest way to open an account at Schwab and then the “other really great thing about Digital Account Open is it sets up clients of advisors to be digital from the beginning,” she pointed out, explaining: “When a client of an advisor goes through Digital Account Open part of that process involves signing up for Schwab Alliance, which is our customized portal for clients of advisors.”

Schwab is seeing paperless statement adoption at about 90% now because clients are “set up with that digital capability from the beginning,” she added.

Move Money

The ability to move money, meanwhile, is a “critical, often very time-sensitive need for both advisors and their clients, Wilkinson went on to say. Schwab has seen a “steady increase in adoption over the last several months” and there’s been an “uptick in the last six to eight weeks as well,” she said, adding three-quarters of Schwab’s wire transfers are now being processed digitally.

The firm recently added a new capability to its digital money movement tool that gives advisors the option to create a supervisory approval workflow prior to money leaving the client’s account, she noted. Firms can now designate an authorized staff member to review and approve all transactions before they execute and leave a client’s account. “This has been really, really important for advisory firms who have an internal risk control process,” Wilkinson said, noting it gives them an “additional step to protect against mistakes and fraud.”

The enhancement has “resulted in higher digital adoption for participating firms because many of them wanted to have that supervisory workflow in place before they fully embraced the money movement tools,” she said.

The increased adoption of Digital Account Open and Move Money has been well-supported by increasing client adoption, she said, noting that, “over the last year alone, we’ve seen an uptick of over 30% enrollment in Schwab Alliance.”

More Coming

While observing what’s happened over the past six to eight weeks, “we’ve been evaluating opportunities to make it easier than ever before to do business digitally,” Wilkinson said.

Development is “underway currently to expand our current capability to open multiple accounts at a time with integrated funding” within Digital Account Open, she said.

“Coming on the horizon very soon” also is the expansion of DocuSign eligibility that she said will make it even easier for advisors to complete their work using DocuSign. Schwab is also “accelerating our rollout of new digital actions with a digital process for MoneyLink setup and several more are coming in just the next couple of months,” she said.

Advisors’ Takes

Two independent RIA firms that custody with Schwab said on the call that the firm’s digital tools were helping their businesses.

Justyn Volesko, managing partner at New York-based AJ Wealth, noted that his firm was started in 2012 with a “large emphasis on digital adoption” and they were “big believers in going paperless.” Going fully digital provides for “significant efficiency as well as security,” he said, adding the “reduction of error” from going paperless has been “huge.”

Mark Radulovich, founder and partner of Houston-based Prota Financial, said his firm “led with technology” from its start in 2016. “The future is now here,” he said, adding Digital Account Open has led to a “huge speedup in the turnaround time” of opening accounts. His firm opened eight accounts one day earlier electronically and it was simple. “That is fundamental change from the way the world worked, I think, a year ago … Now that we’ve gone through this for two months, I don’t think anybody is going back. I can’t imagine anybody wants to deal with paper” again, he said.

Schwab’s Own COVID-19 Experience

Schwab itself now has “over 95% of our employee base that is working remotely” and it has “gone extremely well,” Andrew Salesky, head of Digital Advisor Solutions at Schwab Advisor Services, said during the Q&A, responding to a ThinkAdvisor question.

“Pre-crisis, we were working with remote teams continually; now we’re just doing that from home,” he pointed out.

“We’re learning a lot” from the experience, he said, adding it is “going to give us more flexibility going forward when we come out of the crisis.”

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