Charles Schwab has asked some clients who shared login credentials with third-party data vendors to update their account information, ostensibly to block said parties’ access to their accounts on Schwab’s platforms.
A spokesperson for the firm confirmed the move, first reported by CityWire, via email Monday.
“Schwab is honored by the trust our clients place in us to help them achieve their financial goals and protect their personal information and assets, and we take that responsibility very seriously,” the spokesperson said. “As part of our security processes, we determined that some clients provided login access to third-party data vendors which may void policies we have in place to protect clients through our Schwab Security Guarantee. As part of our data security policy, we required these clients to update their account information.”
The firm did not specify which clients or vendors would be affected by the credential-reset requirement.
The move follows a decision made last year by Fidelity to block client-account access for Pontera, a technology platform provider that allows financial advisors to manage and rebalance clients’ held-away retirement accounts, such as 401(k)s and 403(b)s, from a central dashboard. In that case, Fidelity said that credential sharing presents security risks, particularly when it enables third parties to take “high-risk actions,” such as executing trades within the accounts.
In the time since, Pontera has made what it describes as a quiet effort to persuade Fidelity to change course with the publication of an open letter that paints the dispute as a matter of “consumer choice” rather than “an entrenched institutional incumbent highly conflicted and motivated by their own economics.”
Fidelity has denied that characterization, noting that clients can work with a vetted set of fiduciary advisors through coordination with their employers.
In a statement, a Pontera spokesperson sought to distinguish the seriousness of the Schwab and Fidelity issues.
“Fidelity stands alone in its decision to lock out thousands of consumers from their own accounts," they said. "We should all care about protecting consumers — this is why Pontera took a public stance against Fidelity locking consumers out of their accounts, which actually created risk for consumers by eliminating their digital access to their own money.”
Credit: Diego Radzinschi/ALM
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