Brooke’s Note: There were plenty of reporters’ notebooks being filled. The press room traditionally has been a lonely place for us journalists to write stories while the tumbleweeds blow by in the afternoon. Not so this year. The place was a beehive of activity with reporters working elbow to elbow with competitors — and interviews going constantly at the mid-room tables.
While the big general sessions draw big crowds, some of the best moments at a conference occur in one-on-one conversations or among smaller groups.
Here are some highlights from my notebook featuring chats with Schwab’s top brass and highlights of a popular session on estate planning.
Capitalize on estate planning now
Advisors need to help clients craft estate plans now – before Congress makes more changes – was the message of Charles Fox, an estate planning expert and partner and lawyer with McGuireWoods LLP. While Congress approved new estate rules in 2010, he pointed out that the rules will likely change again by 2013. Constant changes in estate tax rules certainly cause headaches for advisors, Fox said.
“Planners have really struggled to advise clients as the rules have changed,” he said.
The good news, Fox said, is that advisors are likely to have at least two years’ respite under the current rules. Even though the House supercommittee is intending to announce a major proposal on Nov. 23, he believes there won’t be any changes to the estate tax.
“I don’t think we need to worry about changes in the estate tax or gift tax until 2013,” he says.
Fox encouraged advisors to help clients with gifting strategies, at least for the next two years, since there is a $5 million exclusion amount which advisors can help clients gift without being taxed.
Advisors should always offer simple strategies to clients first such as traditional gifts and then proceed to more complex strategies such as gifts for medical expenses. Lastly, advisors can implement complicated strategies such as trusts.
Schwab strong advocates
Nick Georgis, vice president of practice management and strategic business development, shared more details about the advocacy program Schwab launched this year.
“This is very different than the advocacy we’ve done in the past,” he says. “The campaign that kicks off 'RIA stands for you’ has been well received and advisors like the fact that Schwab is pushing their message.” See: Schwab to pump millions of dollars into promoting RIAs as a channel.
“It’s a recognition that many investors don’t know how to select an advisor and we tell them why an RIA would be better,” said Georgis.
Execution of practice management
Georgis says he believes that Schwab’s practice management offering is still as strong as anyone else in the industry because of a new program the company began this year – offering practical workshops and then staying in close contact with advisors, offering them practical guidance. See: Schwab encourages RIAs to adopt client segmentation but some don’t approve.
“It’s not just a speech,” he says. “It’s an ongoing consultative approach. The program might go 8 to 12 weeks and how we differentiate it is we give them ways to implement strategies. I think that’s what makes us different.”
Next year, Schwab intends to complete 20 full-day workshops in 20 cities focusing on three topics: managing clients profitability, “transition on your terms” and strategic planning.
This year the firm piloted this approach, and Georgis expects hundreds of advisors will be part of the program, making concrete changes to their practices.
“Advisors are asking us to do more than present information, and that’s become part of our strategy,” Georgis says.
Beyond white papers
These workshops have been a huge success, says Scott Slater, managing director of business consulting at Schwab. He points out that Schwab has 95 relationship managers who work closely with advisors after each workshop and ensure that advisors are implementing changes to their practices.
The evolution to this practical advice hasn’t happened overnight, Slater says. He points out that 10 years ago Schwab began writing white papers and then in the last five years began offering specific tools for advisors.
“In the old world, you’d say here’s a white paper to educate you. But we’ll work with you and we’re going to have business consultants help make sure that you make changes in your business,” Slater says.
The topics are also specifically tailored for advisors’ practices. “We’re trying to make it fresh and relevant. We’ve looked at the best stuff out there. We’re going to help them implement changes to grow their businesses,” Slater said.
Schwab touts managed accounts
Schwab’s platform of managed accounts has grown 26% in the last year to $55 billion in assets, I learned In a conversation with David Lindenbaum, vice president of managed accounts.
Schwab is now the fourth-largest managed-account provider, according to Boston-based Cerulli Associates.
The platform has been grabbing at least $6 billion in net new assets in each of the last four years, and growth has been triggered by the company’s largest advisors, Lindenbaum says.
“People are using option strategies,” he says. “They don’t want volatility. We’ve seen growth in ETF money managers.”
Lindenbaum says the company has been adding many new strategies each year, because advisors are eager for fixed income products for their clients but also looking for tax-aware funds.