Why Nick Georgis came back to Schwab and how the old hand may bring new vision

Brooke’s Note: When I learned yesterday that Nick Georgis was returning to Schwab to take on – in many ways – a more impressive job than the one he left, I began to make phone calls to people who knew him. It was a happy task. The surprise and pleasure at the other end of the line was of the kind you wish you got when you gave those books to your family for Christmas. But besides these emotions I also got the sense that people believed that Schwab had scored in luring Georgis back to downtown San Francisco after most of six years elsewhere. And Georgis is excited about his latest career move: “I felt like I was going back to school,” he says. “I had trouble sleeping and I was concerned about what tie to wear.” This article looks at this interesting turn of events.

There are at least two reasons to think that it was unlikely that J. Nicholas Georgis would have returned to Schwab Advisor Services after a six-year hiatus. See yesterday’s article: Nick Georgis returns to Schwab Advisor Services

First, the former sales chief of the big San Francisco-based asset custodian came to the company in 1991, when it was still in the entrepreneurial mode. What was then Schwab Institutional had only $8 billion of assets in custody at the time.

Often when companies grow from such a fledgling state into the dominant players in an industry, a whole new generation of executives takes the place of the original leaders. A new mindset and a new set of skills is required as a small battalion becomes an army.

Rarity

Schwab Advisor Services has experienced this changing of the guard. Virtually the entire crew of top executives from the 1990s and early 2000s at Schwab have moved on to other careers. This makes Georgis a rarity at the company.

Secondly, Schwab is a much different company than the one he left.

Georgis departed Schwab in 2004 when it had about $320 billion in assets, and its competitors were still small and unsophisticated. Schwab now has $590 billion of assets and it competes with the capable likes of TD Ameritrade, Pershing Advisor Solutions and Fidelity Investments.

New competitors like RBC, LPL and Raymond James are also bringing good service and good technology to bear on the RIA market.

Catching up to do

Georgis says he has plenty of catching up to do. He also believes that the time away from Schwab may also benefit him in overseeing key business units and setting the company’s long-term strategy.

“I had time to get away from the thinking you get from coming to the office and doing the same thing every day,” he says.

Georgis also gained some new experiences that may give him insight on new duties at Schwab.

For instance, he’ll be overseeing Schwab’s relations with turnkey asset managemenet programs. He spent 2005 to 2006 working for Russell Investments, which provides TAMP services from Tacoma, Wash.

In 2008, Georgis also worked for Wetherby Asset Management, a San Francisco-based RIA that manages $3 billion. Working for an RIA gave him new insights on what services RIAs are most concerned about.

“I have a better idea of how advisors think about Schwab – and how certain things matter and certain things don’t matter,” he says.

Got the itch

Georgis said he left Schwab in 2004 because he wanted to try something else after 13 years in the same environment. “I got the itch to try something different,” he says. “And I had a dream to take a year off.”

Dennis Clark, principal of Advisor Partners LLC of Lafayette, Calif., believes Schwab is fortunate that Georgis is returning to the Schwab flock.

“I think that’s huge,” he says. “Still, today, there are a limited number of professionals that really understand the independent advisory business, and Nick is one of them.” Clark hired Georgis to Schwab in 1991.

Another veteran advisor agrees.

“I think this is a brilliant move by Schwab,” says Richard D. Steinberg, president of Steinberg Global Asset Management Ltd., which manages $500 million from Boca Raton, Fla. Georgis’ return is important to long-time clients like himself because the Schwab hire restores important institutional memory that was lost when Barnaby Grist left last month.

“In big organizations like Schwab with multiple moving parts, institutional memory is [especially important],” he says. “The clients haven’t changed but [corporate management] has.”

There’s another X factor that makes Georgis a potentially great fit at Schwab in 2010, accordinig to Gerald Graves, former head of Schwab Institutional, who now heads an RIA called Filigree Advisors in Lake Oswego, Ore.

Great team

“Nick knows the RIA business really well, and I know he and Bernie Clark [head of Schwab Advisor Services] made a great team,” he says. “They have in the past.”

For example, in the early 2000s, Georgis and [Bernie] Clark were heads of the sales and trading divisions of Schwab’s RIA custody respectively. The two units had a tense relationship with each other until the two executives chose to bridge the gap.

“There’s often a tension,” Georgis says. “We made it our goal to remove that tension, and we did.”

Georgis cites Bernie Clark, who hired him, as a major reason that he came back to the Schwab fold.

Having Clark and Georgis together at Schwab is reassuring to RIAs in another way, according to Steinberg.

“I view Bernie and Nick as advocates for the advisor business,” he adds.

The process of bringing Georgis back to Schwab began about a year ago when Jim McCool called him up. McCool headed Schwab’s RIA custody at the time, and it still comes under his supervision as executive vice president of institutional services at Schwab.

Cordial

Georgis and McCool had developed a cordial working relationship when McCool was still working in Cleveland, Ohio, as a leader of the company’s retirement services division.

“We always had a good relationship in the old roles,” Georgis says. More recently “I think he was surprised how many people brought up my name.”