Many financial advisers, stunned by Deborah D. McWhinney’s abrupt departure from Schwab Institutional, are wondering just what caused it.
Schwab offered little explanation as to why the 52-year-old executive left after more than six years or why there was no warning.
SAN FRANCISCO — Many financial advisers, stunned by Deborah D. McWhinney’s abrupt departure from Schwab Institutional, are wondering just what caused it.
Schwab offered little explanation as to why the 52-year-old executive left after more than six years or why there was no warning.
Yet few advisers found it plausible that her departure occurred in a vacuum, although Schwab wrote in a press release that she chose to retire. Ms. McWhinney was not made available for an interview.
“The manner in which it was announced suggests there was more to it than mere retirement,” said Kevin Timmerman, president of Steele Capital Management Inc., a Dubuque, Iowa, firm that manages $750 million. “Usually, retirement is planned, and there’s a big party.”
While puzzled about the circumstances of Ms. McWhinney’s departure, advisers doubt that the San Francisco-based asset custodian will suffer a leadership void with the ascension of Charles Goldman, 46, who took her title as president of Schwab Institutional, moving up a notch from chief operating officer.
Advisers who have formed close personal ties with Ms. McWhinney said that it is no coincidence that her exit comes on the heels of Walter Bettinger’s rise to president of Schwab in February (InvestmentNews, Feb. 26).
Since February, Ms. McWhinney has reported to Mr. Bettinger, 46. Formerly, she reported directly to Charles “Chuck” Schwab, chairman and chief executive of the company, the advisers said.
In addition, Mr. Bettinger’s position puts him atop both the retail and institutional businesses, which diluted her authority, the advisers said.
But the salt in the wound was the lack of chemistry between the two executives.
“Walt and Debby do not get along,” said one adviser on the condition of anonymity.
Still, Ms. McWhinney had few enemies and many big supporters among advisers who use Schwab as a custodian.
“She went out of her way to make sure you felt like you were important,” said Norman Boone, president of Mosaic Financial Partners Inc., which manages $350 million in San Francisco.
“Personally, I really liked Debby, and those are big shoes to fill,” said James Ferrare, senior vice president with Pinnacle Associates Ltd., which manages $4.8 billion in New York.
Ms. McWhinney had close ties internally, too, and her relationship with Mr. Schwab remains strong, a source said.
Meanwhile, her prospects for landing in a powerful position elsewhere are excellent — both in corporate America and in her home state of Montana, industry sources said.
Ms. McWhinney is planning to explore her options leisurely over the summer, according to Schwab spokeswoman Alison Wertheim. But one adviser said that the executive is receiving telephone calls from companies and recruiters.
In addition, Republicans have approached Ms. McWhinney about running for the U.S. Senate, the adviser added.
A staff member of the Montana Republican Party in Helena, who asked not to be identified, confirmed that rumors to that effect are circulating in the state.
Ironically, in light of her possible political aspirations, some advisers believe that she may have been too politically correct at Schwab.
“She came down on the Merrill Lynch [& Co. Inc. of New York] side of the Merrill Lynch rule.” Mr. Boone said. “It would have been important for her to come down on the side of advisers.”
Mr. Boone excused Ms. McWhinney for her public support of Schwab’s pro-Wall Street stance on the broker-dealer exemption rule but was dismayed when she toed the corporate line in a more private setting. The exemption excuses brokers from acting as fiduciaries..
As for Schwab post-McWhinney, advisers agree that she left no leadership vacuum.
“I know Charles [Goldman], and there’s no fear that the leadership will take a step back,” Mr. Timmerman said.
Indeed, Mr. Goldman filled in for Ms. McWhinney for several months last year when she underwent chemotherapy in her battle against breast cancer.
Ms. McWhinney remains cancer free and healthy, according to Ms. Wertheim.
But whether or not Mr. Goldman provides the same stewardship of Schwab’s adviser business as Ms. McWhinney remains to be seen, Mr. Ferrare said.
“What kind of relationship will Charles have with Walt [Bettinger]?” he asked. “Hopefully, Charles will carry the flag for us. Debby voted [for advisers] with her feet” by leaving.
But advisers needn’t fear that Mr. Bettinger will impose the will of Schwab’s retail business on Schwab Institutional, Mr. Goldman said.
“Absolutely not,” Mr. Goldman said. “Walt made clear the importance of the separation of the business units.”
Advisers will get to know Mr. Goldman better in the future, because he will travel more and act as the public face of Schwab Institutional to a greater degree, he said.
But advisers need not fear that any Schwab executive will make decisions contrary to the interests of financial advisers, said David Bromelkamp, president of Allodium Investment Consultants LLC, which manages $150 million in Minneapolis.
“Schwab’s strategy is clear and embedded in the management team,” he said.
