Custodian plans to waive fees and help firms boost operational efficiencies. In a bid to make the move to independent RIAs more attractive to wirehouse-wary private clients, Schwab plans waive commissions on electronic stock trades and reimburse new-to-Schwab clients for up to one year on fees that outside brokers charge them for transferring their accounts to Schwab. The initiatives start next month and go to the end of the year.

In related move -- this one intended to prompt more RIAs to custody assets with the Schwab and take out licenses for its front-office technologies -- Schwab's Performance Technologies unit is forgoing next year's maintenance fees for its PortfolioCenter portfolio-management software.

"The independent model is inherently different from the traditional Wall Street brokerage model and our advisor clients are well-positioned for the future as more wealthy individuals and families focus on those differences," says Jim McCool, head of Schwab's Institutional Services division. "As the leader in the custodian business for these independent advisors, with a 22-year track record and a very solid financial standing, it is incumbent upon Schwab to leverage [its] scale and strength on behalf of advisors."

New projects

In addition to waiving some e-trading fees, covering transfer fees and giving RIAs a break on some tech-related expenses, Schwab is "investing in an array of new service and technology projects that will begin to benefit advisors by the end of the year," according to a company press release. Those are

A new technology platform that integrates and centralizes features of Schwab's website and the SchwabLink desktop application and gives advisors more flexibility to work with client data
Secure email functionality between Schwab service representatives and select advisors
The availability of Schwab "operations consultants" to help firms' back-office staff work more efficiently, and an education program to help back-office professionals improve their skills in custody management, account service and operations processing.

Al though a clear majority of independent advisors (84%) expect to see aggressive or moderate growth though the next five years, they feel that per-client revenue is likely to fall by as much as 25% from its pre-downturn peak in this period, according to Schwab's latest RIA Benchmarking Study.

This, coupled with a possible influx of clients attracted to the strict fiduciary standards that govern RIAs means that independent "advisors need to manage their costs without cutting back on client service and outreach," says Schwab Advisor Services sales and relationship-management chief Bernie Clark.

Schwab's latest initiatives "are designed to strengthen their ability to do just that," adds Clark.

At the end of 2008, Schwab Advisor Services provided custody, trading, accounting, portfolio-management and other support services to approximately 5,500 RIAs with about $477.2 billion in client assets; a 20.3% decline in assets from the end of 2007. Its biggest rival, Fidelity's Institutional Wealth Services custodied more than $290 billion in end-client assets for more than 3,500 fiduciaries. -FWR

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