Schwab Sorry About Inadvertently Prospecting RIAs' Retirement Plan Business

Monday, August 22, 2011 07:35
Schwab Sorry About Inadvertently Prospecting  RIAs' Retirement Plan Business

Tags: Schwab

Charles Schwab management has apologized for going around RIA affiliates' backs to offer retirement plan participants in-house investment products.

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But the decision to distribute the funds to retirement plan sponsors only reveals how Schwab divides the market between itself and its RIAs.


Schwab clearly saw no conflict in unilaterally telling its 401(k) clients that it will add in-house funds to their investment menus unless they deliberately opt out -- without notifying RIAs who might be advising those accounts first.


Bernie Clark, head of the company's advisor services unit, explains the situation in language we've heard a lot from Schwab lately: the company is happy to work with mass market accounts, while leaving high-net-worth business to the RIAs who use its platform.


Unfortunately, there are plenty of RIAs out there trying to move their business down the market to capture retirement plans and other middle-class assets.


For those advisors, the news that Schwab was effectively going behind their backs -- even inadvertently -- to tinker with plan menus was not exactly a good sign.






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