SAN FRANCISCO, Nov.12 -- With the securities industry continuing to be rocked by near-daily revelations of mutual fund malfeasance, the yearly IMPACT conference hosted by the proudly scandal-free Charles Schwab & Co. this week would seem to be an ideal chance for the “discount” brokerage giant to gloat. Or, at the very least, indulge in a little tsk, tsking.
But with the mutual fund world under assault from government regulators to class action lawyers, things were, well, pleasant. On the opening day of the conference, Schwab Executive VP and Chief Strategy Officer Daniel O. Leemon set the tone with measured remarks, tasteful interjections and soft warnings to stay the course. The message: Whatever’s going on out there doesn’t concern us. We need to worry about ourselves.
“In this environment, advice is still key,”Leemon said. “People are still looking for someone to help.”
That said, The San Francisco Chronicle reported Wednesday that Schwab has been questioned by the SEC regarding its mutual funds, though, so far anyway, the SEC hasn’t found any improprieties.
Leemon talked extensively about the growing importance of high-net-worth clients for traditional Wall Street brokerages, and said Schwab “didn’t have to get caught up in that trap.”He pointed out the massive number of clients with an average net worth of between $100,000 and $1 million. Leemon believes that demographic has a tendency to be overlooked while advisors hunt for elephants. “That’s a gap we’re well-positioned to serve,”he said.
Much of Leemon’s remarks concerned Schwab’s perceived lessening market share in the fee-based world. He pointed to a study showing that even though what he called “general investing”figures fell about 7 percent from end of 2001 to end of 2002, the amount of capital in fee-based accounts remained the same, at about $1.3 trillion. With the fee-based model the centerpiece of Schwab’s business plan, that means more people are heading toward their base business.
Leemon was introduced by Charles Schwab himself, who made a few cursory remarks, along with Deborah McWhinney, president of Schwab Institutional. The lunch speaker Wednesday was Karen Elliot House, publisher of The Wall Street Journal.
The conference, held at the new Moscone West Convention Center, was expected to have approximately the same number of attendees as last year’s, around 1,000. Schwab has 12,000 reps, 5,000 of which are independent. Other speakers at the conference, which ends Friday, include former New York City mayor Rudolph Guiliani and Intel CEO Craig Barrett.
