The institutional arm of US discount broking giant, Charles Schwab, sweetened its support services and offered loans of up to $500,000 in an...

The institutional arm of US discount broking giant, Charles Schwab, sweetened its support services and offered loans of up to $500,000 in an all-out attempt to lure advisors away from the large firms and start their own businesses. The loans will be offered as part of a pilot programme in 11 states including New York, California and Illinois to advisors with at least $75 million in assets under management who wish to leave traditional financial services companies to start their own independent firms. Schwab Institutional is a third-party provider of primarily custodial and trading support for around 5,000 independent investment advisors, according to the firm. The majority of advisors attracted by Schwab’s loans are likely to be those currently employed by large national and regional brokerage firms. Barnaby Grist, managing director of strategic business development for Schwab Institutional, told WealthBriefing yesterday, around 65 per cent of Schwab’s advisor partnerships come from the main brokerage firms, with the rest typically coming from independent broker-dealers. Mr Grist said he expected to see 300 to 400 advisors representing $80 billion in assets make the decision to go independent by 2010 following on from the announcement today. “In the last two years we have seen a tremendous increase in the number of advisors who are choosing to break out on their own. We are committed to making significant investments towards educating advisors about their options and to helping ensure that their transition is as smooth as possible," said Mr Grist. Along with the loans, Schwab announced a new relationship with real estate services firm CB Richard Ellis for transaction and project management support; and expanded an existing partnership with insurance broker and administrator Marsh Affinity Group Service to offer preferred pricing on errors & omissions insurance to advisors who use Schwab’s custody services. In addition, Mr Grist said, each new advisory firm is assigned one conversion consultant. In 2005 Schwab launched a “conversion team” to help ensure that all the necessary paperwork and transition details are completed, including monitoring the account set-up and transfer process for advisors' clients.