Schwab ramps up recruiting at wirehouses

Charles Schwab & Co. Inc. is taking advantage of the financial crisis by attempting to lure brokers from Merrill Lynch & Co. Inc. and Morgan Stanley, both of New York, and other wirehouse brokerage firms to go independent and use Schwab as their custodian, a senior Schwab executive said today. “We’ll accelerate” going after wirehouse brokers, said Charles Goldman, a Schwab executive vice president, who runs the San Francisco-based firm’s Schwab Institutional division for independent advisers. “We will increase the number of business development folks on the street, and we will increase our advertising and marketing programs,” he said in an interview in at Schwab’s annual Impact conference for independent advisers in Atlanta this morning. Mr. Goldman said that while the meltdown at some Wall Street firms is a catalyst for the efforts, the company does not expect hordes of wirehouse brokers to convert to independence overnight. The process of conversion of entrepreneurial fee-based brokers will take place over the next five years, and in the near-term, only those brokers who are well along the path toward independence will use the current crisis to convert immediately, he said. But Mr. Goldman was clear about the significance of the crisis. “If I were an executive at one of the wirehouses, I’d be looking at this situation and be very concerned,’’ he said. “This unfortunate period in the market is going to create opportunity for us, and we are going to spend on this opportunity.” About three years ago, Schwab Institutional began a concerted effort to woo brokers from wirehouses to the independent model through its Advisors Turning Independent unit. Schwab has about 50 salespeople devoted to the effort and has recently begun adding to the crew, with planned hires nationally. Last year, about 110 brokers signed on with Schwab, providing $10 billion of Schwab Institutional’s $66 billion of new assets. This year, the new asset total from the wire brokers has already exceeded the pace for all of last year, Mr. Goldman said. In total, Schwab Institutional custodies the assets of 5,500 advisers who manage $575 billion in client assets. For the full report, see the Sept. 29 issue of InvestmentNews.