Schwab apologizes to RIA clients for marketing letter gaffe

Bernie Clark, head of Schwab Advisor Services, apologized yesterday to the firm's RIA clients, expressing regret for a marketing piece sent earlier this month to advisers' clients who sponsor Schwab-held retirement plans. The original letter, part of a package sent Aug. 9, advises plan sponsors that Schwab will be adding two managed-account programs to retirement plans held at Schwab, unless the client opts out. The letter noted at the top that the mail package did not apply to plan sponsors who work with an independent investment adviser. But that notice didn't assuage Schwab advisers. “They clearly knew advisers' clients were going to get this letter because they put in that disclaimer,” said Ken Winans, president and founder of Winans International Inc., who manages about $140 million. Mr. Winans said he had received no advance notice of the mailing, and that several of his clients contacted him and thought Schwab was replacing his own advisory service with the two Schwab managed portfolios. “I'm e-mailing you today to apologize for the recent mailing that was sent to retirement plan sponsor(s) with whom you have a client relationship,” Mr. Clark wrote in an e-mail yesterday. “I have heard from many of you about this mailing,” he wrote. “In hindsight, it is clear that we should have worked more closely with you prior to communicating directly with the plan sponsor. We understand your role(s) with the plan sponsor, and we attempted to honor that in the letter … I assure you in the future we will work with you and give prior notice when communicating to your plan sponsor(s).” That didn't appease Mr. Winans, who thinks the solicitation was intentional and will happen again. As a result, “We just moved half our assets to TD Ameritrade,” he said. The mailing to plans handled by RIAs was "absolutely against our policies," Mr. Clark said in an interview. "We have controls in place … to make sure [different clients] get the right mailers," he said. "We made a mistake." Mr. Clark said Schwab is now working to make sure the same mistake would not happen again. The Schwab managed portfolios will not be added to plans handled by advisers, he added, and the firm is contacting advisers and the affected clients to explain what happened.