Name: Insights: Charles Schwab’s Keys to Staying Competitive
Uploaded: 2020-02-25
Duration: 2 min 47 s
Description: CEO Walt Bettinger explains how the company incorporates robo-advising into their services.

[MUSIC PLAYING] JEN WIECZNER: There's also robo-advisors. Actually, in the next session, we'll have the CEO of Wealthfront, a robo-advisor that now competes with you. But you also have your own-- OK, but we also have your own-- you have your own robo-advisors, Schwab Intelligent Portfolios. CHARLES SCHWAB: Yeah. JEN WIECZNER: I think it's still about 1% of your overall assets. And about half of your assets are managed by human advisors. So in the end who wins, the robots are the humans? CHARLES SCHWAB: Yeah, so just for clarity, probably about half of our assets are under some form of advisor relationship. But all of those are a mix of technology and people. None of it is pure people. I think the consumer probably wins at the end. Models like a Wealthfront or a Betterment do better for consumers than many consumers could get from an investment advisory model in years past. So I think that consumer wins there. I think programs like our Intelligent Portfolios do better than consumers could typically get in years past. I mean, it's amazing for me to think about the idea that somebody with just a couple thousand dollars can get a fully diversified portfolio, rebalancing, tax-loss harvesting, and have an all-in cost, at least under our program, that's probably measured in a couple tenths of a percent. That's amazing. Maybe it's just because I'm old and been in the business 37 years, but you couldn't even get that 25 years ago. And 10 or 15 years ago, it probably cost you 75 basis points or maybe even 1%. So I think the consumer is the ultimate winner. In terms of smaller firms starting up in the digital advisory space, this issue all just comes down to frame. What is the time frame you're playing on? It's not a matter of, I think, within the companies who wins and who loses. We're playing a long time frame. I mean, we bring in more net new assets every month than those firms have in total. So it's just a different time frame. If your business is financed by BC, there's an exit strategy. And so the frame might be until they're acquired or-- and I'm not saying any of these firms are for sale, but until they're acquired or until some other transaction takes place. That's not our frame. We're playing a multi-decade time frame and investing and trying to build our business under that. But the ultimate winner in all this is the consumer. And frankly, that's great. That's how it should be. 

Insights: Charles Schwab’s Keys to Staying Competitive

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How the company incorporates robo-advising.

Charles Schwab’s Keys to Staying Competitive

CEO Walt Bettinger explains how the company incorporates robo-advising into their services. 

There's also robo advisers. Actually, in the next session will have the sea of, well, front row advisor that now competes with you. But you also have your own. Okay, but we also have your own. You have a robo adviser, Schwab intelligence portfolios. I think it's still about 1% of your overall assets and half about half of your assets are managed by human advisors. So in the end, who wins? The robots are the humans. Yeah, so just just for clarity. Probably about half your assets under some former adviser relationship. But all those are a mix of technology and people. None of it is, is your people. Um, you know, I think the consumer probably wins a t. The end models, like a well front or a betterment do better for consumers than many consumers could get from an investment advisory model in years past. Uh, so So I think the consumer wins there. I think programs like are intelligent portfolios do better than consumers could typically get in years past. I mean, it's amazing for me to think about the idea that somebody with just a couple $1000 could get a fully diversified portfolio re balancing tax, lost harvesting and have, you know, an all in cost, at least under our program. That's probably measured in, you know, a couple of 10 of a percent. That's amazing. Maybe it's just because I'm old and been in the business 37 years, But you couldn't even get that 25 years ago and 10 or 15 years ago, it probably cost you 75 basis points or maybe 1%. So So I think the consumer is the ultimate winner, you know, in terms of in terms of smaller firms starting up in the digital advisory space, this issue all just comes down to time frame. What is the time frame you're playing? It's not a matter of, I think, within the companies who wins and who loses. We're playing a long time frame. We bring in more money, more net new assets every month than those firms have in total. So it's just a different time. Frame it. If your if your business is is financed by BC, there's an exit strategy, and so the time frame might be until their acquired or and I'm not saying any of these firms are for sale but until their acquired or until some other transaction takes place. That's not our time frame. We're playing a multi decade timeframe and investing and trying to build our business under that. But the ultimate winner and all this is a consumer and frankly, that's great. That's how it should be.