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Schwab Says It's Going On Offense—As If It Weren’t Already

Schwab Chairman Chuck Schwab told institutional investors at a regular business update in San Francisco today that the company is preparing to go on the “offense” to gain market share—both in terms of winning client assets and recruiting breakaway brokers.

Schwab Institutional Services, which includes the firm's RIA advisory services unit, Schwab Advisor Services, added 38 financial advisory firms in the first quarter, compared to 21 new firms during the same quarter last year, says Jim McCool, executive vice president of Schwab Institutional. These 38 new firms accounted for $3 billion of the $10 billion in net new assets that Schwab Institutional gathered in the quarter.

Schwab Advisor Services reported rather unremarkable performance in the first quarter, however, bucking a recent trend for the division. (Schwab reported first quarter results on 15 April.) Total assets fell 20 percent to $457 billion, with net new assets diving 52 percent to $10 billion compared to the first quarter last year. The Retirement Services unit, meanwhile, contributed $9.5 billion in net new assets; and Investors Services, its DIY discount brokerage, added $6.2 billion.

Still, McCool says that despite market–driven challenges the Institutional Services unit is strong and the company’s share of the RIA custody market continues to grow. At the end of 2008, Schwab custodied 25 percent of all RIA assets, according to data from Cerulli Associates. Meanwhile, according to Schwab’s Advisor Outlook study, more than 90 percent of Schwab-affiliated advisors have won new clients in the past six months, primarily from full service brokerage firms.

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