For years, wealth managers have praised Charles Schwab as a custodian but bemoaned the onerous process of opening, funding, and making changes to accounts. Some information they typed into computer fields was later subjected to error-prone manual processes. Physical documents still needed to be mailed between parties. For help, advisors say they’ve spent, in aggregate, hours on hold to accomplish regular tasks. The hiccups and limitations of parcel services meant it could take two weeks or more for advisors to onboard a client.
To everyone’s relief, those days of agony will soon be history.
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In July, Schwab Advisors Services plans to launch fully digital client onboarding for the most common account types, executives said Tuesday during a conference call with reporters and analysts. Advisors and clients will be able to securely create and fund new accounts without a person having to lift a finger (other than to a keyboard).
“This is really a major milestone because we realize that onboarding new clients is not just about opening new accounts,” Alison Dooher, vice president of Advisor Digital Onboarding at Schwab, said during the call.
In a demo of the onboarding process for reporters, Dooher was able to create and fund a fictitious account in less than four minutes. “That all happened even faster than I can say it.”
It can be done more quickly. Altruist, a startup investment platform that sits on top of Apex Clearing, has shown it can onboard clients in under two minutes. But the new gap between their onboarding times is almost insignificant compared to what it was previously.
Speed isn’t the only benefit to digital onboarding. It is more accurate, with a “not in good order” status — often referred to as a “NIGO” — occurring in just 3% of requests, a 90% improvement, according to Dooher.
Digital onboarding has long been a goal at Schwab but development to make it a reality meaningfully began nine months ago.
“The integration is very much helping us,” Andrew Salesky, senior vice president Digital Advisor Solutions at Schwab, said about the combination underway with TD Ameritrade.
The company is investing “roughly three times” the amount of money in the custody business that it was before the TD Ameritrade acquisition closed, Salesky said. He declined to share the dollar amount invested during Tuesday’s call.
Along with digitizing tasks, Schwab is “modernizing” TD Ameritrade’s popular portfolio rebalancing tool called iRebal, which it is folding into its own dashboard. Schwab’s advisor dashboard is also getting a facelift and adopting some functionality and navigation of TD Ameritrade’s Veo One dashboard (which will cease to exist once the two companies begin using a single broker-dealer).
In late 2020, Schwab held a conference for technology companies currently, or seeking, to integrate with it. The custodian plans to hold another in September, in part to ensure they are prepared for the integration with TD Ameritrade.
Schwab also plans to continue to add other security types to its digital onboarding later this year, as well as improve it overall. For example, it’s working on “household onboarding” that will enable advisors to transfer multiple accounts more easily and, Salesky suggested, even beyond.
“This builds up from an account level eventually to a full practice being able to be managed through this capability.”
Other recent changes are taking place at Schwab. In April, the custodian shared with RIA Intel details of its new advisor referral program, a combination of Schwab’s existing one and another that came with the purchase of TD Ameritrade.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.