Strategy
US Online Brokers Go for Wealth Management Market
US-based discount online brokerages, Charles Schwab and E*Trade, are targeting customers with at least $250,000 of investable asset with the...
US-based discount online brokerages, Charles Schwab and E*Trade, are targeting customers with at least $250,000 of investable asset with their companies, but who do not qualify as high net worth individuals, according to a report by Dow Jones.
Both companies are keen to demonstrate to this customer base that they have wide wealth management offerings. They have identified this section of the US market that they feel is not on the radar of the nation’s traditional large brokerage houses.
Since January of this year Schwab has been contacting its individual clients with at least $250,000 in assets at the firm, first by mail and then via follow-up telephone calls. Each have been assigned a Schwab broker, or "financial consultant", who was available to meet them and review their portfolios.
As the vast majority of clients have money elsewhere, the aim of these meetings is to persuade the clients to bring more of their assets into the firm and to take advantage of the wider range of services that it has to offer, according to Schwab.
The initiative is an effort to shift the perception of Schwab as a passive "order taker" rather than a company that proactively seeks to drum up business. Other moves include offering investment advice through higher-end personalized investing services, such as its US Trust private-banking unit.
After E*Trade acquired online broker Harrisdirect and Kobren Insight Management, E*Trade president R. Jarrett Lilien says that the firm is on the look out for other investment-management firms according to Dow Jones.
The search is on in key markets such as New York City, Philadelphia, the Washington area, Atlanta, Orlando, Chicago, Dallas and Denver, said Mr Lilien.
The company’s strategy is to use these regional investment advisers to bring in clients with at least $250,000 in assets. "We see it as a great way to hold on to assets that otherwise might come in to E*Trade and leave to get wealth-management services (elsewhere)," Mr Lilien is quoted as saying in the report.
