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Why the Advice Industry Isn't Paperless Yet: Schwab Exec

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What You Need to Know

  • Schwab continues to look for ways to expand Schwab Advisor Center digital functionality.
  • The pandemic-driven increase in digital adoption has further cut down on the need for paper.
  • The Schwab-TD Ameritrade integration would have been easier if one of the firms was much more dominant, Schwab exec Andrew Salesky says.

Despite the significant strides that have been made with digital adoption by advisors and their clients during the COVID-19 pandemic, some obstacles still stand in the way of totally shifting away from paper, according to Andrew Salesky, senior vice president and head of Digital Advisor Solutions at Charles Schwab.

“It’ll be a year we all remember,” he said Tuesday during an online “fireside chat” with Rich Cancro, CEO and founder of wealth management software company AdvisorEngine, which recently announced the completion of its platform integration with Schwab Advisor Center.

The pandemic really didn’t create any new trends — it really just “fast-forwarded the trends that already existed,” according to Cancro.

When it comes to digital adoption, however, “there’s a lot of different claims on how fast we’ve accelerated,” Salesky noted. For example, some believe digital adoption accomplished what would have taken five years in one year, he said.

One statistic he pointed to outside the sector also stood out: “Disney Plus achieved in five months what it took Netflix seven years to achieve,” he said.

The most significant impact over the past year came from the removal of certain obstacles, “some of them real, some of them perceived,” he said, pointing to over 200% growth in electronic signatures and the major expansion in Cisco Webex and Zoom usage.

“We’ve seen great adoption of our end client experience over the past 12 months” also, he said, predicting it’s “not something that’s going to dissipate.”

There was a “new trend and new set of momentum” set that “hopefully we’re going to benefit [from] for years to come,” he said.

The increase in digital adoption has helped to cut down on what he called “sort of the bane of this industry”: paper-based processes. This has increased efficiency for advisors and clients alike so it’s “warranting more investment,” he noted.

But “some of the obstacles” that remain “sit with us, the custodian,” he conceded. That is because, “in some cases, the digital processes are not complete,” he explained. For example, digital account opening is growing but not every account type offers it. Similarly, digital Move Money capabilities are being increasingly used “but not for some of the edge cases,” he said.

There is “always something that still isn’t fully digitally enabled and, I think for some advisors, if it’s not all available, then they go back to the lowest common denominator, which often can be paper,” he pointed out.

“That puts the challenge on us to further build out those capabilities, to truly have robust digital capabilities,” he said. There are now 270 forms on Schwab Advisor Center, its primary custodial site, and “I’d love to see that number dwindle quickly, such that you don’t need any forms [and] it’s all digitally enabled,” he added.

Therefore, the company’s goal is to expand digital capabilities across the site, according to Salesky. For example, “to accelerate our work on digital onboarding, we’re building out the edge cases for Move Money,” he said, adding over 70% of Move Money is “already digitally enabled.”

What also remains challenging, however, is getting people who are used to a certain way of doing things to acknowledge there could be a better way, he said. That takes training support and “might take a little carrot and stick,” he noted, adding that integration partners must also adopt the new capabilities with their teams.

Schwab-TD Ameritrade Integration

Schwab recently projected the completion of its integration with TD Ameritrade will be at the “long end” of its initial estimated time frame and now expects to complete conversion within 30 to 36 months as a result of the increased scope of the project.

“This is a challenging integration, partially because we’re bringing together two strong technology providers,” Salesky said Tuesday. “It would be much easier if one was truly much more dominant than the other and you’re just consolidating onto the dominant platform. But there’s benefits on both sides.”

That is why Schwab plans to offer the “best of both” platforms when the integration is final, although it is more accurate to say it will be the “better of both” platforms, he said.

Reiterating that it will take longer due to the growth Schwab and TD Ameritrade have seen in recent months and the increased scale planned for the project, he explained: “We’re bringing together these two powerhouses of capabilities. And we want to do it right. We want to have benefits for the TDA-only clients, for the Schwab-only clients [and] for the many dual clients that we both have.

Also planned are “a lot of preparation activities as we build up towards that broker-dealer consolidation” between the two firms, to give advisors “time on the platform to understand it,” he said. “We recognize this is no small undertaking to go to a single new custodial platform.”

Pictured: Charles Schwab sign (Photographer: Christopher Dilts/Bloomberg)