After McCool hastily axed alternative investments from Schwab RIA platform, Bernie Clark took the chief custody role as part of the healing process

July 6, 2017 — 11:07 PM UTC by Brooke Southall


Brooke's Note: We'll never really know how to assign Jim McCool a place in RIA history. It was nearly impossible for a journalist to get him to speak off script and nobody on the inside ever gave me much color about him. But he was a survivor and part of the transition from the Chuck Schwab era to the present one where Walt Bettinger is taking over both in body and spirit. McCool was a disciplined corporate soldier who, ironically, broke the story of his own retirement via LinkedIn, which was then picked up by The 401kWire.

James D. McCool is leaving The Charles Schwab Corp., which may help his company close the book on a dark stretch for the firm and its relations with RIAs going back nearly a decade. See: Why RIAs see Bernie Clark's appointment at Schwab as a positive event.

Most recently named as leader of Schwab’s Corporate Initiatives group -- a roving position based in San Francisco but never given much description -- the long-time executive revealed his departure on a LinkedIn posting.

Still, Schwab made it official a couple years back, according to spokesman Rob Farmer.

"Jim’s retirement was planned and announced nearly two years ago (Aug. 2015) and as part of his transition to retirement," he writes in response to an emailed query. "Jim’s responsibilities were dispersed strategically among other executives at Schwab." 

RIAs given notice

McCool spent most of his career in high-level positions but kept a low profile.

But when Schwab fired its former RIA custody chief Charles Goldman in November 2008, McCool became the de facto RIA chief. It happened when Schwab combined its RIA custody and its corporate and retirement services operations into a new unit called Institutional Services that McCool headed -- and Goldman was not replaced. See: Charles Goldman is seeking his game after tumult and a year of decompression.

The deletion of the point-of-contact and accountability for RIAs went without incident until February 2009. It was then that McCool -- perhaps in conjunction with Schwab CEO Walt Bettinger -- made the decision to abruptly give RIAs notice that they could no longer custody alternative assets on the Schwab platform.

It led to 20 big Schwab RIAs writing a letter that expressed great concerns and a series of media articles. The result was that McCool became associated with Schwab the corporation making expeditious decisions first and asking questions later. Schwab worked for months to try to craft a solution with outside vendors that would assuage the RIAs. 

In the end, Bernie Clark was promoted from the sales chief job at Schwab Advisor Services to his current role as executive vice president overseeing RIAs, reporting to McCool. Clark put his seal on an alternative custody line that RIAs, however grudgingly, finally accepted. See: After a wait, Schwab has a program for alternative assets.


McCool went on to hold a variety of oversight jobs including client solutions enterprise. Key business units under his leadership were corporate brokerage services, asset management client solutions, international, cash margin lending and Schwab Center for Financial Research, and Schwab’s affiliate advisors, Windhaven Investment Management Inc. and ThomasPartners, Inc. See: Schwab promotes relative newcomer Terri Kallsen to head retail, with John Clendening getting the golden parachute and Andy Gill transitioned.

In 2012, 401kWire recognized McCool as the 7th most important person in the 401(k) business for overseeing the introduction of Schwab's innovative ETF 401(k) platform. It took the effort a while to get off the ground after that. See: Technical challenges may push Schwab's ETF-only 401(k) plan schedule into 2014 -- deferring an intriguing financial clinical trial.

McCool was the Schwab executive linked most closely with Bettinger, beginning his career in the retirement plan servicing industry in 1984 in Cleveland as one of the initial employees of the Bettinger-owned The Hampton Company, which became a wholly owned subsidiary of The Charles Schwab Corp. in 1995.

Pendulum swing

But of late he had been relieved of any executive authority in what seems to run parallel to a Schwab corporate swing back to innovation and a client-first mentality and away from gratuitously corporate moves.

"There are predictable cycles in business, such as companies becoming more conservative as they age,"  says Tim Welsh, president of Nexus Strategy in Larkspur, Calif. "In this case, Schwab was an entrepreneurial, energetic leader; however ... the corporate black hole represented by executives like McCool ultimately caught up with them, slowing that freewheeling, upstart energy." See: What happened next after a Wall Street analyst called Walter Bettinger on the carpet for capping virtual RIA's fees.

Welsh continues: "Now, it seems that aging cycle might be reversing itself, with Bettinger’s newfound energy to fire back at the robos and the wirehouses, perhaps portending more good things in the offing for advisors."

Share your thoughts and opinions with the author or other readers.


Bolloxed said:

July 7, 2017 — 1:20 AM UTC

Easy access to financial planning for all is supposed to be the next big THING. Wonder what the holdup on this one is? It was talked about quite some time ago but no evident traction at this point.

Stephen Winks said:

July 7, 2017 — 10:56 AM UTC

When it comes to innovation (1) real time client holdings data, (2) prudent process (3) trade execution as a cost center to be minimized, and (4) machine learning algorithms, a more modern approach to portfolio construction, take precedent to financial planning, an dated technology as it exists today. Continuous, comprehensive counsel of fiduciary duty is the future leading to professional standing in advisory services which importantly advances financial planning. SCW

Brian Murphy said:

July 7, 2017 — 11:46 PM UTC

Bolloxed - it's coming; but unlikely initially from the established players. SCW - agreed. Financial planning has a particularly dated sound to it. I think the next generation of technologies to address these needs will be more akin to a financial concierge, quarterback, or perhaps a sherpa...integrated, always present and suggesting ideas as opposed to one-off projects reviewed on an annual basis.

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