High-net-worth investors who dont use Charles Schwab & Co.s affiliated advisers will get access to separately managed accounts, and a more personal touch, in a pilot set to start in April.
The program, announced Tuesday, will extend the San Francisco giants three-year old Signature Services menu, which targets high-net-worth clients in three asset classes.
It also will further Schwabs evolution from its discount-broker roots and in many ways will plug a gap between its traditional offerings and those of its U.S. Trust unit by enabling platinum customers those with more than $1 million to invest to tap into a managed account with an investment minimum of $100,000 and 12 investment styles. The starting fee will be about 1% of total assets.
Schwab will rename three of 12 Signature offices Schwab Private Client Offices and staff them with relationship managers.
The pilot will coincide with the launch of the Managed Account Select separate-account product through the 6,000 investment advisory firms that act as affiliated brokers for Schwab.
The relationship managers operating from Schwabs Private Client Offices will be able to tap into the same stable of separate account managers as the affiliated advisers.
Schwab Signature customers currently have telephone teams dedicated to them, though they can go to any branch for assistance, Schwab spokesman Glen Mathison said.
However, Schwab relationship managers in the pilot offices will continue to refer customers to advisers or to U.S. Trust Corp., the New York private banking company acquired by Schwab last year, which advises on portfolios of $2 million and up.
The result of our interactions with them could be a referral to an independent investment adviser, a referral to U.S. Trust, or ongoing consultation with them through the Schwab office, Mr. Mathison said. Or it could be a combination of the three, he said.
Bill Whitt, practice manager with VIP Forum, a consulting firm in Washington, said of Schwab: It looks like theyre trying to create a way to transition their high-end clients from the discount broker to U.S. Trust. They needed something that was an intermediary step.
But he said the affiliated advisers may bristle at having to compete with Schwabs own relationship professionals. Indeed, the U.S. Trust deal alienated many of Schwabs investment advisers.
Despite the ongoing market downturn, there is still a good supply of high-net-worth investors, Mr. Whitt said. VIP Forum estimates there were roughly 2.4 million households with over $1 million to invest at yearend 2000.
The audience certainly has contracted, but it grew extremely fast in the second half of the 1990s, he said.
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