In his opening remarks at Charles Schwab’s virtual Impact conference for RIAs on Tuesday, President and CEO Walt Bettinger acknowledged that the firm’s layoffs of 1,000 individuals on Monday likely will not be the last.
Describing the recently completed $22 billion purchase of TD Ameritrade, Bettinger said, “this combination is not completely easy, because the truth is we’ve had to part ways with some incredibly talented people, [and make] some tough choices — some that we’ve already made, and of course, some still to come.”
Adding that layoffs and related steps are “the nature of combinations like this,” the CEO said Schwab is “going to look to make every decision we can based on whether it’s ultimately better for our clients or not.”
After sharing these opening remarks with some 2,100 advisors and several hundred other guests, Bettinger and Bernie Clark — head of Schwab Advisor Services — reviewed seven other short- and long-term issues on the minds of RIAs and industry watchers.
1. Size Matters
Clark insisted that the firm doesn’t “have a minimum” for assets under management, and “we’re not going to.”
“We think serving the entire market is incredibly important,” Clark explained. “It’s certainly not my job to tell you when you’ve been successful, because you’ve hit a certain dollar amount.”
As for costs borne by RIAs, “As we go forward, we’re not going to have fees. No custody fees are planned in the future, for sure,” he said.
2. Transition Period
Clark reiterated that the two entities are “in an 18- to 36-month transition” before they become one broker-dealer.
“We want to have that experience be as paperless as we possibly can,” he added.
“We know how difficult sometimes it is to navigate paper. And so it’s important that we get a very seamless process for all of you, as far as technology goes,” Clark said.
3. Tech Tools
In terms of TD Ameritrade technology moving over to the Schwab platform, thinkpipes for options trading, as well as iRebal for rebalancing and thinkorswim for trading “will thrive as part of our overall platform,” according to Clark.
“As we bring our platforms together, we’ll use Schwab Advisor Center as the foundation of all of that,” he explained.
Schwab also “will grow the capabilities from both Veo and Veo One on top of that platform,” Clark said. “We recognize Veo has some fantastic capabilities, and over time, we’ll continue to incorporate those as we go through this transition.”
4. Digital Advice, Direct Indexing
“We can count on the fact that relationships will continue to be key,” Bettinger said.
While they’re “evolving,” he explained, “there’s more of a combination of digital [advice] along with in-person relationships, [and] the idea that in-person relationships will go away is just wrong.”
“If I was running an RIA firm,” Bettinger said, “I would be looking at the digital side of my front door to make sure that I can reinforce my brand while driving growth and encouraging clients in a way that builds trust and, and of course, attracts talent to be competitive.”
The CEO said he’s “really excited about the future in areas like direct indexing. It’s going to have an impact” on clients.
Direct indexing “makes a lot of sense for many investors, [but we’ve] got to get the cost down lower than it is today,” Bettinger said.
With Schwab’s acquisition of some talent and tools from Motif Investing earlier this year, it can take “customization to a new level,” according to the CEO.