Charles Schwab re-unites institutional businesses

FWR Staff

17 November 2008

Online brokerage says the move made not save money but to enhance service. Charles Schwab has re-combined Schwab Institutional , its RIA custody and investment-service business, with Schwab Corporate & Retirement Services, its service platform for corporate benefit plan sponsors and third-party retirement-plan administrators, to form Schwab Institutional Services.

These business lines were combined in Schwab Institutional until about four years ago.

Business-to business

"There are clear synergies between serving independent investment advisors, corporate benefit plan sponsors and third-party retirement plan record keepers," says Schwab's president and CEO Walt Bettinger. "Our new Institutional Services unit will bring together all of our business-to-business services and enable us to leverage strong expertise we have in both groups."

The re-united businesses will be led by Jim McCool, who joined Schwab in 1995 and held leadership positions with Schwab Institutional until 2004 when he took charge of Schwab Corporate & Retirement Services -- just as that segment was taken out of Schwab Institutional.

Charles Goldman, a seven-year veteran of Schwab who replaced Deborah Doyle McWhinney as head of Schwab Institutional in May 2005, is leaving the firm.

Schwab says no significant cost saving will result from the restructuring of its institutional-service businesses. "It's about the efficiency of servicing our clients," company spokeswoman Lindsay Tiles told Reuters today. She adds that Schwab doesn't see jobs being cut in, or as a result of, the business-unit merger.

No thanks

Last week Schwab raised eyebrows when it said it wouldn't stick its hand out for public funds available to it through the U.S. government's so-called $700-billion bailout of troubled financial-service firms.

"We possess a strong and flexible balance sheet with multiple sources of liquidity and strong credit ratings," said the firm's founder and chairman Charles Schwab. "Our capital strength, ongoing operating discipline, and history of conservative fiscal management allow us to continue to maintain the strength, safety and soundness of our business without the need for government capital."

San Francisco-based Schwab has more than 7.4 million client brokerage accounts, 1.3 million corporate retirement-plan participants, 427,000 banking accounts, and $1.2 trillion in client assets.-FWR

Purchase reproduction rights to this article.