Schwab Launches Its Biggest-Ever Ad Campaign With Real Advisors

 "I think it shows a commitment on Schwab's part to partner with advisors in the RIA world," said Yonhee Gordon in a separate interview Thursday, "specifically targeting consumers and educating them. The awareness part is especially important."

Gordon, chief operating officer of JMG Financial in Oak Brook, Illinois, is one of the advisors featured in the Schwab advertising campaign. "The average consumer doesn't know what it [fiduciary and RIA] means, you have to explain it," she said. In many consumers' minds, "the advisor profession has been tied to sales and insurance, but the profession has evolved." It's important "for us as advisors to talk about the value-added services we provide" to clients, and the Schwab ad campaign will be a step in disabusing people of the old notions about advisors.

Moreover, said Gordon, who appeared in Investment Advisor's August 2015 cover story, "our business is relationship-driven," offering as proof clients' delight "when they learn we won't charge them for a phone call or will be selling them a product; our clients should feel comfortable to call us about anything."

When asked what advice Gordon would give to a young person considering a career as an advisor, Gordon said "I think it's a wonderful profession, especially for women." Some "women think it's all about math, but it isn't. Women are very service oriented and want to give back to the community. When you provide the kind of service [advisors provide], you're making a difference." 

The State of Schwab and DOL's Impact

When asked about the state of Charles Schwab & Co. itself, CEO Bettinger responded by citing its first-quarter results, in which "we grew revenue by 16%" over the prior year's first quarter, "and net income by 36%," both records for the company. At the same time, Schwab also announced a record $32 billion in core net new assets and $132.5 billion in net new assets over the prior twelve months. "We just released [on June 14] our monthly activity report" where net new assets in May alone were $16 billion, bringing total clients receiving "ongoing advisory services" to a record $1.31 trillion. "The company," said Bettinger, "is incredibly healthy and strong." 

Speaking on the day when the Federal Reserve announced it would not be raising rates, Bettinger said that if the Fed goes ahead with its intention for two more rate increases "between now and the end of the year, it would be quite beneficial to us as a firm," though while waiting for the Fed "in the meantime we continue to operate our business." However, after "seven years of flat interest rates," should the Fed raise, that would allow Schwab "at some point to be even more aggressive" in its corporate strategy.

Turning to the Department of Labor fiduciary rule, Bettinger said that despite the multiple lawsuits against it, "ultimately, we assume the rule goes forward" in its present form, which means "more people will be generating revenue from fees, with less from commissions, but that's a long way off" still. Asked whether the DOL rule might harm RIAs by taking away one of their competitive advantages, Bettinger said "the DOL is striving for a model where there's less differentiation." However, there will be "significant change" at independent broker-dealers "and even wirehouses," where "most of the assets are in commission-based products" and clients "think they're getting advice for free."

But responding to the competition question, Bettinger said "I want to emphasize that if the appearance of differentiation diminishes, it's only in the portfolio" building process. "RIAs do so much more," he said. "The counseling, the advising, the planning, the education — it's all those other things that are unique," he said, and "much harder to build into an algorithm."

However, Bettinger concluded, the advent of digital advice platforms means that "the whole notion of asset allocation, rebalancing, even tax loss harvesting as a differentiated service — that's going away."

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