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Rating:Schwab Answers Advisor Demands Not Rated 3.0 Email Routing List Email & Route  Print Print
Thursday, November 30, 2000

Schwab Answers Advisor Demands

Reported by Tamiko Toland

Schwab 's May merger with US Trust caused some of its custodial advisor clients to shift in their seats, worried about predation from its new divison. In recent months, however, Schwab has taken measures to use US Trust's facilities to help its clients.

Most recently, Schwab has answered advisors' demands by making available US Trust's namesake trust capacity.

"We have unbundled the offering and made it available for advisors so those advisors can still maintain relationships with their clients but the administration of the trust account is maintained by US Trust," said Schwab spokesman Lance Berg.

Schwab Institutional chief operating officer Gerald Graves asserted that the demand for trust service was crucial to the US Trust deal.

"For years, they have asked us to fill that need," he said. "It was one of the driving forces behind Schwab's merger with U.S. Trust, and now our joint efforts are paying off for advisors."

Although not all advisors are in a situation to take advantage of the new service, it does provide real benefits by broadening advisors' capacities and helping them hang on to their business.

"It's attractive in both the theoretical sense and the practical sense," said Richard Bregman, financial advisor at MJB Asset Management. "One of the difficulties of working with trust accounts is that corporate trustees out there will only serve as corporate trustee if they get the investment management business."

While Schwab has introduced equity research webcasts and teleconferences and has plans for private banking and alternative investment options, the new trust option is the cherry for advisors.

"This is a groundbreaking new development for advisors and clear evidence that Schwab is leveraging U.S. Trust's expertise to benefit independent advisors," said Graves.

Bregman echoed Graves' sentiment. "I think it's the biggest benefit to come out of the US Trust acquisition," he said. Bregman was confident that, while glitches are inevitable, Schwab will be able to work them out expediently.

That said, many advisors are still keeping a wary eye on Schwab. While most custodial clients will not abruptly pull assets from Schwab, they may test the waters with other service providers. Products such as Advent and Security APL allow advisors to transparently maintain accounts with numerous custodians, facilitating this experimentation. 

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