A Word with Walt Bettinger
The economy and stock market have encountered rough waters of late, and when Schwab CEO Walt Bettinger thinks about turbulence, it’s clear he believes that the company’s role is to help investors suit up for the challenge. I spent some time talking with Walt about how investors are feeling, and how Schwab’s help and guidance might help them navigate the turns ahead.
Alison: How have clients been feeling these past few months?
Walt: It’s a mixed bag, really. We survey our clients every quarter, and although they told us they were feeling worse about their financial situations overall at the end of the summer than they had at the beginning, a significant number also expressed enthusiasm about investing opportunities ahead. Most importantly, they seem to be mindful that this is a marathon and not a sprint. They aren’t making dramatic shifts.*
Alison: Are we seeing any difference in sentiment among different types of clients?
Walt: This steady-state is definitely also present among investors who work with independent Registered Investment Advisors (RIAs) to manage their investments. We know from the 7,000 or so independent advisory firms that work with us that they are having regular conversations with their clients to ensure they are comfortable with their approach and not overly concerned by the daily flow of economic and international news. And many of our clients who trade actively find markets like this full of interesting opportunities -- they are extremely engaged of late. In some regards, volatility like we’ve experienced is a real positive for them.
Alison: What kinds of conversations are we having with clients and prospects these days?
Walt: I would say they are pragmatic. People are looking for help, but with someone who is new to Schwab, they may arrive with a latent distrust in the financial services industry. That perception that brokerages are just out to “sell” -- it’s a hard perception to overcome, but we try to step back and help folks start by thinking about their goals, their personal timelines, and their appetites for risk. There’s incredible value in having a meaningful dialogue. For us, the investment products take a back seat.
Alison: So is interest in Schwab-style advice on the rise?
Walt: Yes, but of course guidance comes in a few different flavors here. Some investors still prefer to go it alone, and to them advice means access to tools like our Portfolio Performance Reporting that helps them evaluate their progress against established benchmarks. For others, it means having an interaction with a professional – and the appetite for this flavor is certainly in the rise. At the end of September, enrollments in advisory solutions at Schwab stood at 2.4 million accounts, up 153,000 from the prior year. And I suspect this number will continue to grow – recently, more than three out of four clients told us they would be more confident about reaching their financial goals if they had periodic advice from a professional.
Alison: Are we talking to a lot of prospects these days?
Walt: We literally have hundreds of conversations every day. In each case, we listen very hard, and offer an honest assessment of each situation. And every month on average 4,000 more investors decide to have us manage their money. I’m immensely proud of our employees for the time and care they show these investors, and humbled by those clients who choose to place their trust in us.
Alison: So what about cost… are investors particularly price-sensitive these days?
Walt: You know, it’s no surprise that people are tired of being nickeled and dimed, and that they have grown weary of trying to figure out where the hidden costs are buried. I don’t think people are so much shopping for bargains – most people appreciate that value comes at a price – but they want to see and understand what they are paying for. And that shouldn’t be too much to ask, really.
Alison: Thanks so much, Walt, for taking time to talk with us today!
* The Q3 Schwab Survey of Investor Confidence was conducted in September 2011 and aggregated the views of more than 1,000 retail clients. Online interviews were conducted September 8 - 23, 2011, by Synovate, Inc.
©2011 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.
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