Charles Schwab & Co. makes mutual fund owners fume by denying access to critical RIA asset data; some call it a 'cynical power play;' Schwab calls it a OneSource streamline

CEO Walt Bettinger tells analysts profit-taking and fund consolidation could be looming after $400 million hit from zeroing-out commissions.

Author Oisin Breen November 1, 2019 at 7:42 PM

5 Comments

Walt Bettinger: I don’t know that I’d go so far as to say that we’re committed to letting anyone and anything on to our platform without regard to the economic implication.

RIA Custodians

Walt Bettinger

mutual funds

OneSource

Charles Schwab & Co.

Dan Doyle

November 3, 2019 — 12:35 PM

Different than SCHW, dealerships provide an incredible amount of value to comsumers. Good luck scheduling service, getting a part, or expressing a complaint to TSLA. The buying process needs improvement, but dealers add underappreciated value to consumers. Manufacturers get the value of standby buyers, ease of delivery, and a partner to focus on low margin sales & service. OEMs need dealerships. SCHW is rearranging the shelves, but still needs some base inventory.

James Edwards

November 4, 2019 — 4:09 PM

Finally, no more cold(warm) calls from wholesalers just because we bought their funds. I know how and where to find them if I need information beyond what I used to buy the fund. The deluge of stale data and time wasting phone calls can cease.

PS

November 4, 2019 — 4:51 PM

The key issue here is the potential of linking payments data with access to be on the firm platform available to investors. Hopefully Schwab does not play this game. Wirehouses will deny it but they put pressure on managers to buy data services in a pay to play arrangement. Managers like Vanguard refuse this but subpar managers desperate for distribution might write the check.

GW

November 4, 2019 — 6:34 PM

I don't think this should be a surprise to anyone who has been close to Schwab's product area the last 2 years. I also don't think there should be any surprise when Schwab does start going overtly "pay to play" for data. There are few other places to look for revenue replacement given their "strategy". Mutual funds have historically provided a disproportionate share of over firm top line and, given the sheer scale, will again be targeted to carry the freight. It will be interesting to see how they respond to investor demand for funds that don't fall into their core offer. Historically, this has been a pain point and it seems like it will become more of an issue, both in terms of "client experience" and human capital cost.

BKD

November 6, 2019 — 2:10 AM

Thank you! I've been watching and waiting for someone to write an article about this disruptive action taken by Schwab, but knew most asset managers would not want to go on the record for fear of any form of retaliation. When asked about the frequency for reviewing assets and bps as assets grow, Schwab said 'probably once a year'. Asked about a data pack in the future, no plans. This cripples the small-to-medium sized funds who rely on the platform and used the data transparency to drive and support their marketing efforts.

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