Charles Schwab & Co. has teamed with the consulting firm of Callan Associates to provide investment consulting for Schwab advisers beginning sometime in the second quarter.
The new service, called Managed Account Select, will provide the approximately 6,000 advisers doing business through Schwab Institutional with access to money managers from a list researched and screened by San Francisco-based Callan Associates.
“I looked at that and laughed,” says one of Schwab’s East Coast advisers. “Callan is a good shop, and I guess it is a good thing for money managers, but it is a service I won’t use. It still looks like 2% or 3% and you can get that from Merrill or one of the other [wirehouses]. I just don’t see this as anything I’d ever utilize.”
Schwab confirms that the new consulting service competes directly with wirehouse wrap accounts. It hopes the new bundle of services, such as due diligence, monitoring, research and training offered by Callan will drive more business. Only about 9% of Schwab advisers currently use money managers.
Managed Account Select bundles the fees for Callan, Schwab and the money manager, and will be priced to advisers “at around 1%,” says a Schwab spokesperson. Minimum account sizes will be as low as $100,000. Editor's note: For any comments regarding this article, or to suggest a story idea for RR Online or Registered Representative magazine, contact Editor in Chief Dan Jamieson at [email protected], Online Editor Rick Weinberg at [email protected], Online Managing Editor Cheryl Cooper at [email protected] or Senior Editor Mike Hayes at [email protected]