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Bernie Clark, head of Schwab Advisor Services

Industry Spotlight > Mergers and Acquisitions

Schwab Considers Loan Options for Clients

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What You Need to Know

  • About 2% of Advisor Services clients look to Schwab for loans.
  • Offering loans would prevent those clients from looking elsewhere — potentially taking their assets with them.
  • For the near future, Schwab expects to offer loans only through partners, but more is planned on a long-term basis.

The Charles Schwab-TD Ameritrade platform conversion was the main focus of company executives who spoke Wednesday during the Schwab Impact conference, but the firm also disclosed that it’s looking to provide its own loan options for clients.

“We’ve been talking about lending and, quite honestly, the liability side of the balance sheet for quite some time,” according to Bernie Clark, managing director, head of Advisor Services at Charles Schwab.

“It’s one of the most difficult things you do when your client has a need and you have to go find a solution, perhaps with a competitor, perhaps someone who’s going to try and entice the asset management into their shop as well,” he explained.

Therefore, “we’ve wanted to grow that capability more and more, and we’ve made some fabulous advancements with our bank, but we have lots more to do,” he said.

Schwab has found success on the mortgage front through a partnership with Rocket Mortgage, he noted.

“But we need something more sophisticated for many of you,” he admitted. “I know you’re taking advantage of that [Rocket] offering and I’m glad that’s working well for you. But we have to get something more sophisticated in the marketplace that you can utilize so you don’t have to go out to a Goldman or a Morgan Stanley as a borrowing source … and we’re committed to that.”

Echoing him, Rick Wurster, president of Charles Schwab, pointed out that “about 2% of our Advisor Services clients come to us for a loan and … we know clients would like to take more loans with us because we have some of the industry leading rates” and also “would keep you from having to introduce another relationship into the client relationship.”

There are “a few things we’re focused on,” Wurster said but didn’t provide any specifics.

“I would say, in the near term, the next one to two years, our focus is on making it easier to consume our existing products,” Wurster said. “So whether it’s a pledged asset line or a mortgage, we want to make it easier through our relationship model,” he explained. “That’s our near-term focus, and we hope that will drive value for you and your clients.”

But Wurster added: “As we look at [the] longer term … we do want to look at what we can do to help you in the more esoteric loan spaces, whether it’s unsecured loans or loans against more esoteric collateral.”

Further explaining Schwab’s goal, Wurster said: “We want to take a look at how we could be helpful to you there because if we can help you cement that relationship, maybe not introduce someone else into that relationship that you might not want there, we think we can expand on that 2%” of Advisor Services clients turning to Schwab for a loan.

TD Ameritrade Integration

Charles Schwab intends to complete the conversion of TD Ameritrade onto Schwab’s platform over the Labor Day weekend of 2023, Tom Bradley, managing director of Schwab Advisor Services, disclosed during an online briefing with reporters just ahead of Schwab Impact.

Schwab completed its $22 billion acquisition of TD Ameritrade in October 2020, forming a brokerage firm with over $6 trillion in client assets.

“I think the integration is going to be very beneficial to the people in this room and to our company,” Wurster said Wednesday.

One reason, he said, is that it “brings us scale and what does scale provide that’s a benefit to you? No. 1 is our commitment to not having custody fees.”

Wurster also thinks that the combined capabilities of the platforms of the No. 1 and No. 2 custodians are going to be “really powerful,” he said, pointing as examples to the iRebal portfolio rebalancing tool and Thinkpipes trading platform that are being integrated into Schwab’s platform.

Wurster added: “You can count on the scale and the enhanced capabilities coming out of this integration, making it an even better time to be a custody client here at Schwab.”

With the transition to the integrated Schwab platform, “our objective is to make sure we make that as easy for your clients as possible,” Clark said. But he conceded it “won’t be perfect…. We all know that this is a big move.” Schwab intends to make sure that everybody is “very well prepared to transition” over the 2023 Labor Day weekend, he added.

(Pictured: Bernie Clark, head of Schwab Advisor Services)


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