Schwab Advisor Service Comes at a Price
Charles Schwab Corp. will begin charging financial advisors $2,000 each quarter to use its AdvisorSource program, which matches individual investors with advisors in their area.
The San Francisco-based investment firm on Friday sent its network of advisors a letter detailing the new program, which starts Jan. 1.
Schwab will charge $1,000 for the first two quarters of 1997, “to give everyone an opportunity to experience the improvements in the services.” a spokesman said. But it will require all advisors to buy a one-year membership.
Under AdvisorSource, advisors are charged a percentage of their management fees earned from assets brought in through Schwab.
Schwab was charging 30% of the management fees earned in the first year, 25% the second year and 20% the third year.
Schwab said advisors and trade groups complained that the variable fee was unfair. The critics claimed Schwab gave more referrals to stronger advisors who were certain to generate more revenue for the firm.
Advisors who subscribe to the service will be guaranteed four referrals a month.
Schwab has 420 advisors in AdvisorSource and 4,800 advisors using some type of service at Schwab Institutional.
Schwab says its average client referral in AdvisorSource has $370,000 to invest.
Departures: Boston-based Putnam Investments fired two veteran municipal bond fund managers, David Eurkus and Michael Bouscaren, according to a person familiar with the situation.
Eurkus, who worked at Putnam for the past 13 years, is best known for helping lead the $2.1 billion- New York Tax-Exempt Income Fund to top-tier results.
Bouscaren joined Putnam, a subsidiary of Marsh & McLennan Cos., about two years ago from Salomon Bros.’ money management group.
Putnam confirmed the pair had left but said the company “mutually agreed” to part ways with Eurkus, 50, and Bouscaren, 49.
Special (k): Americans are receiving better service in 401(k) and related “defined-contribution” retirement plans, and they are responding by investing more cash in these programs.
That’s the word from the Profit Sharing/401(k) Council of America, a Chicago organization that counts as members those companies that offer defined-contribution programs to their employees.
Among the findings from an annual survey of 668 companies is that workers now receive more investment options and better education than ever before.
As of last year, 86% of eligible workers participated in 401(k) and related plans. They had an average account balance of roughly $65,300, with 59% of that invested in stock funds.
Three-quarters of the companies surveyed offered at least five investment fund choices.
Contributing to this column were Bloomberg Business News, Dow Jones and Russ Wiles, a financial columnist for the Arizona Republic.
