Conference Call: Its conference challenged, Schwab pulls off a win

Deborah D. McWhinney was so pleased as she boarded the Friday afternoon flight from Seattle to San Francisco that she could barely stop smiling.

“I’m just so glad we did that,” said Schwab Institutional’s new president of services for investment managers. She had reason to smile. The 11th annual Impact conference almost didn’t happen – and it could have been bungled.

The scheduled dates – about a month after the Sept. 11 attacks on the World Trade Center and the Pentagon – fell too close to those events for business to proceed as usual. So Schwab polled its advisers to see if a majority still wanted to come. The result: 510 of the 900 who had signed up decided to attend.

“It’s the Super Bowl of adviser conferences,” says Dan Hornbaker, regional sales manager for Rydex Funds of Rockville, Md. “You’ve got to be here.”

A testament to the conference’s status was the fact that both of Schwab Institutional’s major rivals, TD Waterhouse Institutional Services of New York and Fidelity Institutional Brokerage Group of Boston, chose the previous week to issue a raft of press releases about new offerings to advisers.

Considering the land mines Schwab had to avoid, Impact 2001 was perhaps its finest hour. It accepted a thankless challenge. If it flopped, it would have added insult to the demoralization felt by all in attendance. Many advisers came against the wishes of their spouses.

If it succeeded, it would still be weighed down by a double whammy: the pall of world economic and foreign affairs, and comparisons with its own blockbuster conference of 2000.

In Denver last year, Kool & the Gang performed, and a juiced-up Janus Funds spared no expense as a major sponsor in its hometown. This year, a Neil Diamond knock-off band played, and the hometown sponsor was Rainier Investment Management Mutual Funds, which sprang for a general session and a breakfast. The exhibition-hall buzz was a muted hum, though people rocked to “Sweet Caroline” at Gabelli Funds’ gala.

But the conference’s sweet spot for its 1,250 or so total attendees, including exhibitors, was its authoritative, appropriate and entertaining speakers.

Arthur Levitt, former chairman of the Securities and Exchange Commission, said that since Sept. 11, he has paid more attention to what is important in life. “I spent yesterday fishing Long Island Sound instead of preparing for this speech,” he said, to an eruption of applause.

Mr. Levitt added that he backs advisers. “You really are my people,” he said. Still, he defends stockbrokers. “These are good people caught in a bad system.” He also professed his confidence in the strength of American business. “The stock market is not the economy,” he said.

Weightier world concerns were left to George Shultz, President Reagan’s secretary of state, and retired Lt. Gen. Brent Scowcroft, President George Bush’s national security adviser during the Gulf War.

Mr. Shultz spoke from a chair beside chairman and co-CEO Charles R. Schwab. Here was the epitome of the New World executive with the may-the-force-be-with-you sage of the Cold War era. Mr. Schwab gracefully relented as Mr. Shultz thwarted any efforts to keep his presentation to a time-allotted question-and-answer format.

“There may be some other shoes to drop, but we’re getting hold of this thing,” Mr. Shultz said. “We are lucky enough that leaders come forth at times like this.”

Meanwhile, in wrapping up the conference, Mr. Scowcroft gave a more ominous speech. “We are an open society. It is impossible to guard against [terrorism]. Pakistan itself could turn into a terrorist state with nuclear weapons,” he said.

Still, he sounded the same final positive note as Mr. Shultz, about the effects of the world’s facing a common evil. “It gives us a way to deal with the Iranians, the Russians, the Chinese,”Mr. Scowcroft said.

Stealing the show, however, was 33-year-old Canadian Jamie Clarke, who described three attempts and two failures at climbing Mount Everest. Without making it sound too contrived, he compared his failures to losing investing strategies and his success to winning ones.

He was hilarious for 75 minutes. “At lunch today, my [Morgan Stanley sponsor] looked at me as if to say, `You’d better not suck!”‘ he said.