Intern, young-leader programs on tap

Nov 18, 2012 @ 12:01 am

By Dan Jamieson

With the average age of financial advisers creeping higher and many smaller firms struggling to come up with the resources to find and develop the next generation, Schwab Advisor Services is putting its corporate heft behind a new effort to help its advisers build for the future.

Last week at the company's Impact 2012 conference, Schwab officials said that they plan to introduce an executive education program for future leaders at advisory firms and an intern program for new entrants.

Schwab will pilot the intern program next year and the executive learning program in 2014.

“It's a classic scenario of a small business not having all the resources that we have to help” them develop new talent, said Bernie Clark, head of Charles Schwab & Co. Inc.'s custody unit.

The programs are still under development, but Schwab will hire young people as interns at its facilities, with the aim of preparing them to work at a Schwab-affiliated adviser, he said.

“I would suspect these individuals would ... work in an Orlando [Fla.] or Phoenix [Schwab office] where we service advisers,” Mr. Clark said. “They'd sit among the teams that are serving advisers.”

SEVEN SCHOOLS

The program also will involve seven colleges that Schwab supports in providing financial planning programs: DePaul University, Texas Tech, the University of Akron, the University of California-Irvine, the University of Dayton, the University of Illinois at Urbana-Champaign and Virginia Tech.

“I wouldn't exclude schools that are geographically near our [service] centers” in Orlando and Phoenix, Mr. Clark said, mentioning Arizona State, the University of Arizona and the University of Central Florida.

The executive learning program is projected to be primarily an online effort to teach the “realities of running a firm, sourcing, hiring, developing and maintaining talent, and a host of other leadership responsibilities,” Schwab said in a statement.

Mr. Clark said that the idea for training rising stars at advisory firms came during a discussion he had with an adviser about the intern program.

The adviser said, “"That's great, but what about some training as well for our up-and-coming executives?' So we said, "Yeah, that'd be great,'” Mr. Clark said.

Schwab is developing some of the leadership training internally, but the company also will lean on industry associations “to help us think about this,” he said. “Certainly, we've begun those conversations with them already about programs they provide,” Mr. Clark said.

IN-PERSON TRAINING

The objective is to provide in- person training sessions in addition to online learning, where all the attendees are junior leaders of independent registered investment adviser firms who could build lasting networking relationships, Mr. Clark said.

He declined to disclose how much Schwab is allocating to the initiatives, saying only: “We're spending a lot.”

Advisers said that the industry needs to develop young talent.

The intern program is “an outstanding idea and long overdue,” said Dave Huber, chief executive of Huber Financial Group Ltd., a Schwab-affiliated adviser who runs his own intern program. He also likes the idea of the leadership program, saying that it could help firms transition to the next generation.

As for recruitment, Schwab this year is on track to match or beat results from last year, when it brought in 166 breakaway teams with $12.1 billion in assets.

“We'll have about the same number of teams, and I would expect the assets are going to trend a bit higher” because of more wirehouse recruits, said Tim Oden, head of business development at Schwab Advisor Services.

Breakaways from the wirehouse channel were up 35% year-over-year for the 12-month period ended Oct. 31, due to the winding-down of some retention packages this year, he said.

About 45% of Schwab adviser recruits come from wirehouses, 35% from independent broker-dealers and the rest from advisory firms and other sources, Mr. Oden said.

Schwab holds in custody about $762 billion in assets for nearly 7,000 advisers.

djamieson@investmentnews.com Twitter: @dvjamieson

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