Schwab to cut the ribbon on its third franchise office

The Charles Schwab Corp. will be opening its third franchised branch office next month, said chief executive Walt Bettinger on Thursday. Schwab opened its first franchise office in December at a location in Nashua, N.H. In March, the brokerage opened another franchise office in Mequon, Wisc. The firm is looking to have about a dozen offices open by year-end, Mr. Bettinger said during a webcast with analysts. Addressing the perception that the Independent Branch Services program has gotten off to a slower start than planned, Mr. Bettinger said that, within the franchise industry overall, it normally takes a new operator three years to get to 25 locations. Critics of the program have said it isn't competitive with other independent options, since established Schwab franchises split revenues 50-50 with Schwab. Schwab is recruiting experienced advisers as franchisees. The firm is " being very careful and selective" in signing on its "pioneers" for the program, Mr. Bettinger said. Franchise offices should be able to bring in $10 million a year in net new assets, Mr. Bettinger said. "That number is … quite attainable, and we think the results will show that, and are already showing that," he said. Separately, the Schwab Index Advantage program, a 401(k) plan offering index funds, has ten to 12 plan sponsors who have made a commitment to sign on, Mr. Bettinger said. "Several 100 [401(k)] clients are interested," he said, "and we expect that [program] to accelerate rapidly." Schwab is also developing an all-ETF 401(k) program, due to roll out sometime next year.