With a market share more than twice that of its closest competitor, The
Charles Schwab Corp.'s Advisor Services unit is the acknowledged king of the RIA mountain — and Bernie Clark intends to keep it that way.
Mr. Clark, who took charge of the Schwab custodial unit in May, is in the enviable position of seeing his competitors trying to play catch-up.
But don't expect Schwab to rest on its laurels.
“We're not going into a prevent defense,” Mr. Clark said at the company's Impact conference in Boston last week, his first since becoming head of the unit.
“We want to be the primary custodian for advisers” and keep competitors as “secondary” custodians to advisers who need to diversify their assets, he said.
Schwab has a 25% market share in assets held in custody for advisers, Mr. Clark said, with second-place
Fidelity Investments at 12%.
To solidify its market position, Mr. Clark said that Schwab's Intelligent Integration technology initiative should help drive asset growth at both large and small advisers without those firms' needing to add staff members.
Still under development, the plan is to integrate outsourced portfolio management, trading and re-balancing capabilities through a customer relationship management system.
As a first step, Schwab said last week that it had reached an agreement with CRM provider salesforce .com and is working to land CRM Software, maker of the popular Junxure program, and Microsoft Corp. as its other CRM participants.
Competitors will have nothing similar, Mr. Clark said.
Schwab is also looking at ways to offer more international services, he said.
“We need more capability in international markets, all the way to multicurrency trading,” Mr. Clark said.
The firm is trying to find an external partner for its global-expansion effort.
Before he was promoted to his present job, Mr. Clark was in charge of sales and relationship management for Schwab Advisor Services. He joined the firm in 1998 as senior vice president for institutional trading and operations.
Mr. Clark said that he feels confident about keeping Schwab on top in the RIA custody business.
“There are a lot of follow strategies [from competitors] and not much original thought,” he said.
Doesn't he worry about the competition?
“We worry about everybody,” Mr. Clark said. “The reality is, we have a strong position, and our objective is to make it stronger.”
Other custodians, of course, are aggressively courting Schwab advisers.
Mike Durbin, president of Fidelity's custody unit, said Fidelity has expanded its asset custody business by nearly 25% per year, on average, over the past five years, has beefed up its service teams and provides the industry's first integrated platform. He said the company has a strong capital markets capability and noted that Fidelity recently announced that its RIAs will have access to single-family office services.
“We believe our creativity and willingness to invest serves the RIA marketplace well, and pushes our competition to step up,” Mr. Durbin wrote in an e-mail.
Meanwhile, Mr. Clark shrugged off comments by competitors, and some Schwab advisers, about whether Schwab's custodial clients have to compete with Schwab's discount-broker affiliate.
Schwab's individual investor business is “probably more aggressive in satisfying the needs for the mass-affluent client than most” firms, he acknowledged, “but they're different markets,” Mr. Clark said.
Beginning next year, Fidelity is bumping up the quarterly fee it charges advisers with less than $10 million at the firm to $2,500, from $1,200. Schwab will stick with its $1,200 annual fee for advisers with less than $10 million at Schwab.
E-mail Dan Jamieson at [email protected].
