Page 29 - Investment Advisor - December 2023

largely in non-client-facing areas.” In early September, Schwab Advisor and specialized service from Schwab’s
The “Wall Street Journal” reported in Services executives said the conversion support teams; pricing benefits across
late October that it learned of the layoffs of TD Ameritrade advisors to Schwab’s Schwab’s bank and broker-dealer solu-
after seeing an internal Schwab message, custodian platform went remarkably tions; expanded borrowing choices; and
which also disclosed “some remaining well, with no significant problems. “This access to a range of wealth management
employees will have new jobs or manag- [Labor Day] weekend, we moved [over] specialists on topics including tax, trust
ers.” Lawrence Sprung, founder of Mitlin 7,000 advisor firms from the green plat- and estate planning, equity compensa-
Financial in Hauppauge, New York, said form, [which is] the TD Ameritrade tion, retirement planning and family
on X, the network formerly known as platform to the blue, or the Schwab, support, according to the firm.
Twitter, at the time that he was “so sorry platform,” Bernie Clark, head of Schwab The firm has been providing some of
to hear about this,” and that his firm was Advisor Services, said during a media these benefits to clients previously, but
looking for a senior wealth advisor. phone briefing. the new service approach brings every-
Schwab said it was planning to trim its Schwab Advisor Services also tran- thing together into a “premier expe-
workforce, services and office locations sitioned 3.6 million accounts held by rience,” said Jonathan Craig, head of
to lower its yearly operating expenses advisors’ clients and about another 3.6 Investor Services, in a statement.
by some $500 million a year. Those million on the retail side also, with “$1.3 At the time the news was made public,
cost-cutting moves followed some of its trillion in assets moving overall,” mak- Schwab’s total client assets were $7.65
final integration efforts tied trillion. Assets in Schwab’s
to its $22 billion purchase of “A week before the August retail business — Investor
TD Ameritrade. Services — stood at roughly
“In order to achieve these layoffs announcement, Schwab $4 trillion, while assets in
cost savings, the company reported lower net flows the firm’s investment advisor
expects to incur exit and business — Advisor Services
related costs, primarily relat- in both retail and advisory — were $3.6 trillion.
ed to employee compensa- According to Schwab data,
tion and benefits and facility clients’ assets tied to its the high- and ultra-high-net-
exit costs, of approximately worth client segments are
$400 [million] to $500 mil- TD Ameritrade acquisition.” among the fastest-growing
lion,” the firm explained in client groups — and among
an 8-K filing with the Securities and ing it the largest conversion weekend the most important to its bottom line.
Exchange Commission. for the company among the three it did, Through June 2023, the HNW and
“The company anticipates most costs Clark said. As of now, “80% of all cli- UHNW client segments have grown to
related to position eliminations will be ents have now transitioned over to the represent more than two-thirds of the
incurred in the second half of 2023, Charles Schwab platform,” he added. firm’s total retail client assets. Clients
and costs related to real estate will be In mid-July, Schwab announced that with more than $1 million at Schwab
incurred in 2023 and 2024,” it said. investor clients with more than $1 mil- have grown at a rate of more than 10%
Mayura Hooper, a Schwab spokes- lion in assets at the firm will be automati- annually over the last five years, while
person, said in an emailed statement cally enrolled into Schwab Private Client clients with more than $10 million at the
to Bloomberg in August would “result Services, while clients with $10 million firm are growing at a rate of nearly 20%,
in eliminating some positions in the and up will be enrolled in Schwab Private the firm said.
coming months, mostly in non-client Wealth Services. These clients will have With the move to create two new
facing areas. We don’t yet have specif- access to a dedicated Schwab consultant HNW and UHNW service units, Schwab
ics to offer on how many positions will who is responsible for their overall rela- joins other its rivals in carving out spe-
be eliminated.” tionship with Schwab, at no additional cial service models for the wealthiest
A week before the August layoffs cost to them, according to a news release. retail clients. Vanguard offers wealth
announcement, Schwab reported lower This consultant can help clients man- management services, including a dedi-
net flows in both retail and advisory cli- age their financial life, help them choose cated financial advisor and a wealth
ents’ assets tied to its TD Ameritrade the right level of advice or services they management team, for clients with at
acquisition. The client attrition was in line need, create a personalized financial least $5 million, and flagship services
with the firm’s expectations for the deal, plan, and connect them to a range of for those with $1 million to $5 million.
which was announced in 2019, it said. Schwab’s wealth management special- Fidelity offers private wealth manage-
Schwab noted that this attrition should ists, Schwab says. Other features of the ment for those with at least $10 million
subside in the first half of next year. new program are priority assistance in total investable assets.

December 2023 Investment AdvIsor 27