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Schwab launches business unit targeting RIAs

Schwab Intelligent Technologies part of the evolving strategy to deliver on the firm's technology promises

Sep 16, 2011 @ 11:40 am

By Davis D. Janowski

There's a new RIA-focused business unit at Schwab: Schwab Intelligent Technologies.

The Charles Schwab Corp. issued a press release last week announcing it.

A journey to the reference notes at the bottom of the release makes clear that it is legally a new silo of responsibility related to but not a part of Schwab Advisor Services.

SIT will be responsible for working on one half of the Schwab Intelligent Integration technology initiative, specifically building the integrations for the open-architecture modular affair called Schwab OpenView Gateway.

After receiving the prepared statement announcing SIT, I briefly spoke with Brian Shenson, managing director of Advisor Services technology for Schwab.

He referred to the ecosystem of applications that Schwab hoped will develop as the OpenView Gateway program expands. I asked whether Schwab intended to charge third-party technology providers to join the program.

“There will be a program participation fee and fees will grow in a commiserate way,” he said.

He explained that all the integrations, and therefore fees, would not be parallel or equal.

“Some [integrations] will be broader and deeper and fees will be highly dependent on the scope of the integration and the number of users,” said Mr. Shenson.

When I asked about the rationale behind this he replied succinctly.

“This is a substantial investment on Schwab's part to build these integrations and Gateway program participation is going to be valuable to their business,” he said, referring to the third-party application providers.

I pondered this a bit and theirs is a fundamentally different approach from that being taken by TD Ameritrade. That firm has opened up its application programming interface for its Veo account management systems — not willy nilly mind you — but to those that can pass the firm's security muster.

And it is those third-party providers that are themselves building and responsible for the integrations, with help and assistance from TD.

Divide and conquer

During our conversation he clarified for me that the turnkey offering (what I refer to as the other half of the Schwab Intelligent Integration initiative) would be the responsibility of the Schwab Performance Technologies business unit, which would also be responsible for selling the turnkey offering as well.

This turnkey, fully outsourced and hosted technology offering, recently re-named Schwab OpenView Integrated Office (known previously as Schwab OneView Office).

OpenView Integrated Office will include as its central hub a version of, one highly customized by Schwab Performance Technologies and tailor-fitted to PortfolioCenter and data flowing in from Schwab Advisor Services.

As I mentioned in a recent column select advisers who use Salesforce will begin pilot testing Schwab OpenView Gateway and Schwab OpenView Integrated Office this month.

On the other hand, the goal of SIT and the OpenView Gateway offering with all the third-party partners Schwab hopes to attract onto it, will one day provide independent-minded registered investment advisers with a smorgasbord of technology choices.

OpenView Gateway will pair backend custodial client data from Schwab Advisor Services with a choice of one of three third-party customer relationship management applications Schwab selected that will serve as the hub of the Gateway.

These will include Junxure from CRM Software Inc., Microsoft Dynamics, and

RIAs that select one of these three flavors of platform will, in the future, in turn be able to visit an application buffet (so to speak), and add additional third-party applications that SIT has built the integrations for, like added spokes on their Gateway wheel (oh the horror, mixing food and engineering metaphors).

These will include applications in many different areas from financial planning, to portfolio management and performance reporting to document management, among others.

SIT will be responsible for building all those integrations and working with the third-party providers.

“Integrating with Schwab technology is very exciting because for the first time we'll have real-time data immediately available within a CRM environment,” said Greg Friedman, president of CRM Software Inc. and himself a Junxure user and adviser.

That statement came from the Schwab press release but Mr. Friedman has expressed the same sentiment several times recently in coversations.

The idea is that once the integrations are built all these applications will be able to seamlessly share data, at the very least in a one-way direction (meaning downstream from Schwab Advisor Services and/or the CRM system).

And by this we don't mean a downloading and importing/exporting of files.

Rather, it is supposed to mean a single log-in/sign-on and then seeing recent or real-time data that has travelled or is travelling, passing unseen behind the scenes.

The big idea is that rather than the adviser or a support staffer having to initiate a download in the morning he/or she can take that time and concentrate on other things — marketing folks usually refer to meeting with clients or prospecting — business building endeavors instead of tedious, efficiency- and time-thieving technology management (who has time for that!?).

[NOTE: These last four paragraphs can just as easily refer to the hoped-for-results of efforts underway at TD Ameritrade Institutional with their open-application programming interface initiative. There are also rumors and hints of things afoot or in the offing at Fidelity Institutional Wealth Services that would, in future, paint a similar scene of there being an adviser's-choice of mix-and-match apps available for their WealthCentral platform as well.]

For those interested, here are those reference notes from the prepared statement:

    1 Custody data from Charles Schwab & Co., Inc. (CS&Co), a registered broker-dealer, member SIPC. CS&Co is affiliated with, but a separate company from Schwab Intelligent Technologies and has no responsibility for Schwab OpenView Gateway or any participating provider, or Schwab OpenView Integrated Office.

    2 Schwab Intelligent Technologies and Schwab Performance Technologies (SPT) are businesses of a subsidiary of The Charles Schwab Corporation separate from their affiliate CS&Co that, through Schwab Advisor Services™, provides custody, trading and related services to independent investment advisors, while Schwab Intelligent Technologies and SPT provide advisors with related technology products and services. Schwab OpenView Gateway participants are independent companies that are not affiliated with Schwab Intelligent Technologies or any of its affiliates. Participation in the Schwab OpenView Gateway is not a recommendation or endorsement of, or referral to, the participant by Schwab Intelligent Technologies or any of its affiliates. Advisors are solely responsible for evaluating, selecting and purchasing products and services offered by Schwab OpenView Gateway participants.

Related stories:

Custodians putting all the technology pieces together

TD Ameritrade Institutional reporting progress on its open API initiative

Neesha Hathi: Leader of Schwab tech project under pressure

Schwab offers more details about Intelligent Integration, other tech projects

Neesha Hathi of Schwab Advisor Services shared insights at the FPA national conference in Denver

Custodians rev up their platforms

TD to open Veo architecture to third parties to lure advisers

TD Ameritrade launches tech initiative, moves toward completely open architecture

Schwab releases more details about new advisory tech platform

Fidelity, Pershing, Schwab, TD in a tech 'arms race'

Will Pershing's NetX360 live up to its promise of full integration?

Fidelity to spend $50M on platform for advisers


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