In an effort to ease the financial pain of its registered investment advisors, Charles Schwab has announced a series of initiatives that will save them money.
Beginning in July, Schwab will waive commissions on electronic equity trades and reimburse account transfer fees for its RIAs’ clients. The offer is good through the end of 2009. And for the more than 2,200 investment advisors who use Schwab’s portfolio management software, the firm says it will waive related maintenance fees next year.
The moves come as RIAs are faced with increased financial pressures related to loss in revenue, increased client demands and a changing regulatory landscape. In a 2009 RIA benchmarking study, 84 percent of respondents said they expect to grow aggressively or moderately over the next five years. But in the near term revenues are expected to decline. Revenue per RIA client grew 20 percent in 2006 and 2007, declined slightly in 2008 and is expected to drop 25 percent in 2009.
Schwab says it is also planning a number of technology upgrades, including a newly designed technology platform, secure email functionality between select advisors and Schwab representatives and the debut of a new program that will provide training to back-office RIA staff.
Meanwhile, rival Fidelity has made moves to amp up its technology offering. It recently recruited a series of executives from the RIA and brokerage worlds, including Schwab Institutional's former No. 1, Charles Goldman, and has invested about $50 million to upgrade its technology platform in the past 18 months. For more on Schwab’s rivals, click here.
