WealthManagement Magazine

Schwab Touts Independent Investment Advisers

Charles Schwab & Co. has committed some $5 million dollars to an advertising campaign designed to make investors aware of the multitude of virtues of independent fee-based advisers. The ads, which will run in selected national media throughout 1998, hardly mention Schwab's name at all. Convincing investors that independent advisers have more to offer than traditional brokers, appears to be reward

Charles Schwab & Co. has committed some $5 million dollars to an advertising campaign designed to make investors aware of the multitude of virtues of independent fee-based advisers. The ads, which will run in selected national media throughout 1998, hardly mention Schwab's name at all. Convincing investors that independent advisers have more to offer than traditional brokers, appears to be reward enough for the firm.

According to Tom Taggert, Schwab's head of corporate communications, the ads are an outgrowth of the firm's increasing commitment to Advisor Source, its program that matches customers with fee-based advisers.

"There are absolutely clients that we want to retain--and do retain--that have outgrown the 800 number concept," he says. "This is one solution for them."

"Many customers who chose the self-directed route are getting older and wealthier, and there's some admission that they need help, along with a desire to be treated a bit more specially," says Michael Gazala of Forrester Research in Boston.

As an accompaniment to the ad campaign, Schwab has created a booklet for consumers about advisers, titled "Independent, Objective, Fee-Based and Relationship Minded."

Schwab Institutional Services has long provided back office support for independent advisers. In 1995, they kicked off Advisor Source, which moved the process of referring clients to independent advisers from an 800 number to the branch offices. Today, customers who walk into a Schwab branch, with more than $100,000 in investable assets typically are steered to local independent advisers. To qualify for the program, advisers must have at least a three-year track record and $25 million in assets under management. They pay Schwab $2,000 a quarter to cover administrative fees. And of course, the firm hopes they will steer customer assets in their direction and away from traditional brokerage as well.

There are now more than 15,000 independent advisers who managed about $900 billion in assets, an increase of almost fivefold in the past six years, according to Cerulli Associates, a Boston-based research firm.

"When the firm that built itself on the idea that the customer knows best starts using words like "relationship" in its marketing materials, "you know something is up," says Dennis Gallant of Cerulli.

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