Fast Track – Schwab exec’s task: Make brokers, advisers a team

The difference between good and great for Schwab Institutional’s newly retooled referral program comes down to whether it can herd cats and dogs together.

That’s why the unit of Charles Schwab & Co. in San Francisco has tapped the one man it thinks can meow out of one side of his mouth and bark out of the other.

Robert S. Klapper is being groomed to head Schwab’s new Advisor Network. His job is to create even greater harmony between notoriously free-spirited independent advisers and more buttoned-down W-2-filing branch brokers.

The close rate by advisers of branch-generated leads is a frustratingly low 30%, even after years of effort. To reach Schwab’s goals, Mr. Klapper thinks, he needs to bring that figure closer to 50%.

“I won’t be successful if we don’t find a way to do that,” he says.

These are daunting expectations, but Mr. Klapper says he relishes the challenge because of a new tail wind blowing through his adopted division.

“It’s a blast,” he says. “We have the support of the corporation from [co-CEO] Dave Pottruck on down, and the fact Advisor Network is woven into the [Schwab] fabric is critical.”

The level of support Mr. Klapper is realizing from the top derives both from his reputation among Schwab’s retail elite and the role that the referrals are starting to play in Schwab’s corporate strategy.

Mr. Pottruck and company can hardly miss the hard numbers. Independent advisers are gathering assets on behalf of Schwab at a rate that exceeds retail efforts on a percentage basis.

Mr. Klapper, 42, was the chief of staff for the head of retail business and branch development in 1999 and 2000. He then became general manager of Schwab’s insurance and annuities business. He built a successful electronic platform there that cut costs.

In early March, he took over Advisor Network for the second time in his career. The first time was in 1999, after a Wall Street Journal article called the program a flop. Since then, it has grown more than 400%, to $14.1 billion in assets referred.

The difference is that last time Mr. Klapper answered to bosses on the retail side. At the time, basic processes needed refining and branch brokers needed basic education.

This time the stakes are far higher, and Mr. Klapper says he feels like he’s being allowed to bat from either side of home plate.

“They wanted not a retail program and not an institutional one,” he says. “It’s a Schwab program.”

It’s something his new boss, Deborah D. McWhinney, president of services for investment managers at Schwab Institutional, believes in.

“I chose Rob because he was so highly regarded across the company,” she says.

Although his task is complex, his goals are simpler. In addition to pushing the close rate to 50%, Advisor Network’s success depends on the number of good leads that Schwab’s retail division can generate from more than 400 branches.

Schwab has enlisted more than 300 advisers that it deems worthy of receiving the lucrative leads it produces.

To add to this elite group, Mr. Klapper needs to educate and motivate Schwab’s retail branch managers to fill the pipeline to advisers with qualified leads and be sure those advisers are worthy and motivated to close them. The average referral is $1.8 million.

“He’s really seen as someone who knows how to make things happen,” says Ms. McWhinney. “He’s a businessperson. As we want to build our program and take our close rate higher, it’ll be the difference between good and great.”

Adrian Moravcsik, senior vice president and principal at Stein Roe Investment Counsel LLC in San Francisco, applauds the appointment.

“When we heard about his promotion, we were thrilled,” Mr. Moravcsik says. “An extraordinary talent of his is to have people rally around him. It gives added credibility” to Advisor Network.