Family Office
Schwab broadens managed acct distribution
Discount pioneer repeats “Main St. v. Wall St.” mantra. Charles
Schwab & Co. has just made separately managed accounts (SMAs)
available to all its qualified retail brokerage clients – at far
lower prices, it says, than its wirehouse competitors.
“Our managed account pricing is as much as 50% below the
published rates of major competitors,” Schwab’s retail brokerage
head William Atwell says in a press release. That, he adds,
continues Schwab’s “heritage of giving Main Street investors
affordable access to the investing opportunities previously only
available from Wall Street at high prices” – an apparent
reference to Schwab’s post-“May Day” role as a pioneer of
discount brokerage in the 1970s.
Up till now access to Schwab’s SMA platforms has been exclusively
through Schwab Private Client and registered investment advisors
(RIAs) who work with Schwab Institutional.
Particulars
Schwab is giving retail clients access to two of its SMA
platforms. “Managed Account Select” features a roster of about 40
third-party managers, researched and reviewed by investment
consultant Callan Associates. “Managed Account Affiliates”
features five investment strategies from Schwab affiliate U.S.
Trust, including a tax-efficient index strategy, and five from
Charles Schwab Investment Management, based on Schwab Equity
Ratings research.
Minimum investments for Schwab’s retail SMAs are $100,000 for
most equity strategies and $250,000 for most fixed-income
strategies.
With $24 billion in assets at the end of August 2005, Schwab was
one of the 10 biggest SMA distributors. Though it trails
industry-leading SMA sponsors like Smith Barney and Merrill Lynch
– each of whose SMA assets easily surpass the $100-billion mark –
Schwab says it’s program is growing fast, having posted a 39%
increase in assets in the past 12 months or so.
Schwab has offered SMAs to RIAs who work with Schwab
Institutional since 1998. Schwab Private Client introduced them
to high-end retail investors in 2001. RIAs distribute about 80%
of Schwab’s SMAs.
Schwab does not offer multiple-discipline accounts or unified
managed accounts. –FWR
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