Schwab plumps up roster with new dividend offering

The Charles Schwab Corp. has rolled out its new dividend growth strategy under its new ThomasPartners asset management unit. The company made the offering available to both its retail clients and its registered investment advisers last week through the Schwab managed-account program. In December, Schwab acquired ThomasPartners Inc., which has $2.3 billion in assets, for $85 million in cash, adding an internally run dividend strategy to its high-profile Windhaven Investment Management Inc., a tactical manager of exchange-traded-fund portfolios. Since Schwab bought Windhaven in 2010 with the hope of attracting investors interested in downside protection, assets at the firm have more than tripled; it had $15.6 billion as of March 31. Most of the Windhaven assets have come from retail clients. But more than 100 of the firm's affiliated RIAs use Windhaven for clients, Schwab spokeswoman Alison Wertheim said. Schwab hopes to see the same kind of acceptance for the ThomasPartners dividend growth strategy as more investors near retirement and seek steady income. The minimum investment for the ThomasPartners strategy is $100,000, both for clients of RIAs and for retail investors. Clients of Schwab advisers get discounted pricing of 65 basis points or less. Retail clients pay 90 basis points or less. Fee break points begin at $500,000. Even with wholesale pricing, wide acceptance by Schwab's 7,000 RIAs may be limited, since many manage portfolios themselves. “We have our own investment philosophy,” said Dick Bellmer, a partner at Deerfield Financial Advisors Inc., which uses Schwab as a custodian. That's why “the odds are probably slim and none” that the firm would use ThomasPartners, he said. Nevertheless, Schwab has been successful building its stable of fee-based offerings, which have bolstered earnings as trading and interest income have languished. Total assets under management in what Schwab calls “advised solutions” stood at more than $135 billion as of the first quarter, up from $115 billion as of March 2012. The company has more than $2 trillion in total client assets.