Role of Financial Consultant at Discount Brokerages

[Tranquility Base]

I have been meaning to ask this question for several weeks now but I just never got around to it. Then I received a voicemail message today from a new Schwab financial consultant telling me he was replacing my previous one who was no longer with Schwab.

I am pleased to be advised of the change. But although I wish the previous FC well, I guess I don't really care that he has left. My question is how people at a discount brokerage utilize their financial consultant (account rep?) and what exactly the financial consultant's role is.

I moved over to Schwab about 3 months ago basically to handle my investments myself and that is what I have done. I don't mean to sound like a know-it-all, but I haven't utilized the original FC very much beyond having him review my investments ahead of time to make sure everything could be transferred and to point me in the right direction a few times regarding navigating Schwab's website.

I was open to using the FC more and in the beginning I probably thought I would. But for most questions it was faster just to call an 800 number than to schedule an appointment with my FC for a week out. Gradually it seemed that the FC wasn't able to answer my questions but would always give me another phone number/person to contact directly. It always seems that appointments with people at Schwab were limited to 30-40 minutes. I get it; we are not paying commissions for trades so discount brokerages can't do a lot of hand holding. But for my larger questions, scheduling a meeting that would be limited to 30 minutes would simply be a waste of everyone's time from the get go. So I decided just to dive in and figure things out for myself (for better or worse).

I don't mean to be disrespectful, but what exactly is the role of the FC at a discount brokerage? At least in my situation, I increasingly got the impression that when I dealt with them it was like walking into a big box store when I am working on a project. You can ask the greeter at the front door or some employee in an aisle (if you can even find one, because often there are friendly employees in the aisles only in the commercials) where something is located in the store, and they can probably help you. But in most cases they can't (and maybe aren't supposed to) answer any questions beyond that (such as questions like "How do I fix this?").

I'm not heartbroken that my old FC has left by any means. He seemed like a friendly person. I did smile at times that he was a few years younger than my youngest child, so maybe late twenties. The new FC seems to be just a few years out of college. Again, I'm not a know-it-all by any means. I'm just curious and trying to understand better what these people are supposed to do. I haven't gotten any big sales pitches from them. But so far they seem to be a bit like a Walmart greeter, only they wear a shirt and tie (at least in their photos) and don't look scary like many Walmart greeters. I suppose I could/should ask them what their role is. But the bigger question would be how would they ever accomplish this when they limit appointments to 30 minutes.

 

[RetiredAt49]

They are nothing more than a warm seat in a corporate charter… for a short time I used Fisher Investments and my FA was a young guy who would talk our ears off about nothing relevant nor important.

 

[Dash man]

My Schwab FC was my FC at USAA before Schwab bought their Investment Management company. So I’ve known him a long time. He coordinates any requests I have, such as when I experimented with a managed account. He coordinated an updated financial plan we did earlier this year. I call him instead of the customer service people if I have a need for anything. He helped get us connected with the trust department when we were redoing our estate planning, and set me up with a bond trader when I wanted to learn more about bonds. He calls once a quarter to chat and see if we need anything. He’s never pushed us to buy anything knowing we manage our own investments.
He answers emails and returns calls quickly. His title is Vice President, but I don’t know how common that is at Schwab.

 

[DrRoy]

I have one at Fido. Has been different people over the years. I just listened to what he proposed to see if I liked an idea. I don't think I ever changed anything. Got some estate advice too.

 

[big-papa]

I have one at Fido. Has been different people over the years. I just listened to what he proposed to see if I liked an idea. I don't think I ever changed anything. Got some estate advice too.

Likewise here at Fido. The difference is I choose never to talk to them. I don't respond to their emails or take their phonecalls. No need.

Cheers
Big-Papa

 

[PaunchyPirate]

OP, I switched to Schwab (from Vanguard) in January. I view the person that contacted me when I called to inquire about my moves as a salesman. He did his job, which I wanted him to do. He answered any upfront questions that I had and nicely facilitated my move to Schwab. He had a more "technical" guy call me to discuss some particulars of the transition. Both of these people were very easy to work with and willing to answer any questions that I had.

But I also told them up front, that I was not looking to pay for ongoing advisor services. They didn't try to sell me on that at all before or after I told them this. I have not called them for added services and they have not called me. I would call the 800 number for assistance at this point. I view the upfront people as the ones who are out trying to get new customers for the company. If I signed up for advisor services (for a fee) then I would feel otherwise.

 

[target2019]

I met an FC at Schwab when I first went to the local office around 2015. He was a VP. He was smart and not just a salesman. Schwab pays the salary.

I handle all of my requests, and found the message feature worked very well for me.

Lately we emailed the local office for advice, and they pointed us to the correct form. They also handled sending us a letter that an insurance company requested for a rollover.

I think the FC's role changes depending on your balance.

As you've found out, some institutions have built different channels of service. The messaging fits my needs well, and since we are DIY, there's not many questions for the company.

 

[clifp]

Schwab doesn't do a great job explaining what their Financial Consulting folks are supposed to do but this picture helps.

I think of them as your primary care physician. They can help with many basic tasks, but the primary task is to help you find the right person at Schwab to help you. Obviously, for Financial planning or investment management, Schwab makes more money if they can get you to use their services.

I have had the same FC for 20 years. She calls me a couple of times a year, and invites me to various webinars and the occasional seminar. I contact her once or twice a year when some weird form wants my banker to certify something.

 

[scrabbler1]

I have had an Account Executive (no fee) at Fido since 2008, about 6 months before I ERed. That year, having an AE was quite helpful, from running Fido's RIP program to meeting with him when I made some very large purchases in late 2008 to begin my ER.

Over the years, I'[d meet with him once every 12-18 months just to discuss my portfolio and general financial situation. He showed me new tricks to using the Fido website and gave me some advice on a few things. I feel it is useful to have an AE who knows my specific situation so I don't have to explain everything to a new person on the phone or on line.

Fido has has some turnover with AEs in their local office, so I have had to meet with new ones every so often. I had a good one from 2010 through 2021 after going through several in 2008-2010 and have had 2 different ones after the man left 2 years ago.

 

[gauss]

Perhaps the purpose is to add some friction to the process of moving your assets to a different brokerage? Even if it is only having to field the phone call from the FC inquiring why your are leaving.

-gauss

 

[2017ish]

Ours was useful in getting Schwab to match a competitor's published transfer bonus.

Other than that and a "know your customer" meeting when we opened our first account with them 8 years ago, we've not talked to him.

 

[OldShooter]

We have had named Schwab reps for a long time, maybe a couple of decades. I have used them mostly as tools to get things done or fixed, no more frequently than once a year. Rarely but usefully I have asked questions like "What does Schwab think about <some security or asset class>. For both types of purpose, they have been very high service, responding with an answer or a solution in a day or two. At no time have I solicited investment advice nor has it been offered. I am not even sure they are allowed to do that rather than refer customers to advisory options.

Said another way, they have met consistently 100% of my limited needs.

I try to remain familiar with them and to be on a first-name basis. If something serious comes up, I don't want to hear "who?" when I call.

 

[PatrickA5]

I think their main job, of course, is to make the company money. And, to keep the money from leaving.

I've had the same FIDO advisor since we moved from VG about 5 years ago. Met with him once. He didn't really try to sell too hard. All of my emails to him lately have been answered by his "assistant". I think the actual FA only wants to directly deal with me if I want to use one of their paid services.

Having said that, we recently moved DW's inherited assets to FIDO, so we have close to 1M in a taxable account in a MM fund. I've had at least a half dozen calls and emails in the last month from "relationship managers" wanting me to set up an appointment with my FA to "co-create a plan to help my assets work efficiently towards my investment goals". I haven't responded and don't plan to.

 

[Mark1]

......
It always seems that appointments with people at Schwab were limited to 30-40 minutes. I get it; we are not paying commissions for trades so discount brokerages can't do a lot of hand holding. But for my larger questions, scheduling a meeting that would be limited to 30 minutes would simply be a waste of everyone's time from the get go.

.......
But the bigger question would be how would they ever accomplish this when they limit appointments to 30 minutes.

OP, it appears one of your concerns is the 30-40 minute meeting. I'm curious what you would like to cover with an hour+ meeting? Tax planning, investment advice, etc.? For example, "What does success look like to you"?

I'm kind at the other end of the spectrum as I prefer my 5 minute meeting every 5 years with my Fido advisor, but I get it that folks have different wants and needs.

 

[Gallaher]

I’ve been with Schwab over 25 years and have outlasted a few of their consultants. Even successfully ignored the one that left and asked me to follower her.

Early on the consultants were just contacts if I needed something. Later, as my account grew they did become even more service oriented offering products for me to consider. Never pushy or sales oriented. Eventually my consultant told me his job was to keep my account at Schwab.

In 25 years I’ve had maybe 20 phone conversations and about ten live meetings.
No need for more. I have always been happy with Schwab. Eventually moving my vanguard and fidelity accounts there.

 

[Ncc1701]

Guess I'm uniquely qualified to answer this one. I was a VP Schwab FC for 11 years.

Basically the goals I had were to:

1. Ensure client satisfaction and retention with all of the clients in my "practice" by providing great service. For this I was paid a tiny percentage of the assets in my practice. This was called my "service pay" and was considered my salary. Schwab offers more high level advice with CFPs and other specialists to those with $1M+.

2. Influence clients to deposit money. I had a set goal each year which I had to meet. I would get paid 8 basis points on every dollar that I influenced. This was a part of my "sales" pay.

3. The most important goal and the most challenging (as well as the reason I left) was to sell managed accounts. This is how Schwab and Fido pay the rent. I would get paid 20 bps on assets that I enrolled in any fee based service including the Robo Advisor (Intelligent Portfolios). This was the other portion of "sales pay" and was the single most important metric my managers looked at.

I was called a "Vice President Financial Consultant" but really the role is to be a managed money salesperson. Prior to it becoming a high pressure sales job, I really enjoyed my time at Schwab, it was the best job of my career.

 

[RetiredAt49]

Guess I'm uniquely qualified to answer this one. I was a VP Schwab FC for 11 years.

Basically the goals I had were to:

1. Ensure client satisfaction and retention with all of the clients in my "practice" by providing great service. For this I was paid a tiny percentage of the assets in my practice. This was called my "service pay" and was considered my salary. Schwab offers more high level advice with CFPs and other specialists to those with $1M+.

2. Influence clients to deposit money. I had a set goal each year which I had to meet. I would get paid 8 basis points on every dollar that I influenced. This was a part of my "sales" pay.

3. The most important goal and the most challenging (as well as the reason I left) was to sell managed accounts. This is how Schwab and Fido pay the rent. I would get paid 20 bps on assets that I enrolled in any fee based service including the Robo Advisor (Intelligent Portfolios). This was the other portion of "sales pay" and was the single most important metric my managers looked at.

I was called a "Vice President Financial Consultant" but really the role is to be a managed money salesperson. Prior to it becoming a high pressure sales job, I really enjoyed my time at Schwab, it was the best job of my career.

Really appreciate hearing from employees on the “inside”, it’s just another reason to self manage your own portfolio!

 

[Tranquility Base]

His title is Vice President, but I don’t know how common that is at Schwab.

I don't know how common that is at Schwab either other than most of the people I have encountered at Schwab (to the extent I am given their name and can find a home page for them at Schwab) seem to have the title of Vice President. Even the new FC, about 2 years out of college, is a VP. In the banking business, my impression is that VPs are a dime a dozen.

 

[Tranquility Base]

Schwab doesn't do a great job explaining what their Financial Consulting folks are supposed to do but this picture helps.

I think of them as your primary care physician. They can help with many basic tasks, but the primary task is to help you find the right person at Schwab to help you. Obviously, for Financial planning or investment management, Schwab makes more money if they can get you to use their services.

Thanks for the picture! Actually, I had begun to think of the FC a bit like my primary care physician in that at each visit you are allotted a very small amount of time so you better be prepared with the 2 (maybe 3) most important things you need to address. There usually isn't enough time to cover anything more. My PC physician, however, is excellent and can and does handle many matters himself. Maybe I just had a bit of a dud FC because after the first few contacts, mainly involving my switch over to Schwab, his answers were generally to give me the name and number of someone else to contact. That's better than just leaving me high and dry. But it didn't exactly give me much incentive to use him as a resource or to try to build a relationship with him.

 

[Tranquility Base]

Over the years, I'[d meet with him once every 12-18 months just to discuss my portfolio and general financial situation. He showed me new tricks to using the Fido website and gave me some advice on a few things. I feel it is useful to have an AE who knows my specific situation so I don't have to explain everything to a new person on the phone or on line.

That's basically what I was hoping to do - meet periodically just to discuss my portfolio and general financial situation. I wanted to discuss it with him. He did say I could probably get an investment review of some kind for free, instead of the usual $300 (I think) charge. I'm curious though; how long did your meetings last?

 

[Tranquility Base]

Perhaps the purpose is to add some friction to the process of moving your assets to a different brokerage? Even if it is only having to field the phone call from the FC inquiring why your are leaving.

-gauss

That's an interesting thought. But in my case, I don't think I would feel much friction. Before I transferred the accounts to Schwab I did ask what the transfer fees charged by Schwab would be (just to confirm what I already knew - $0). He said they would reimburse the transferor's transfer fees upon request. I accepted that offer and Schwab did reimburse the fees. Very quickly too I might add, although I did combine a few of the accounts before the transfers were made in order to reduce the expense to Schwab.


But in order to reduce any feelings of friction down the road, I didn't even inquire about any transfer incentives or bonuses. I didn't want them even though I might be leaving money on the table because if I was ever unhappy at Schwab in the future and decided to leave, I didn't want to have any obligation to repay anything or even to feel beholden to any FC or brokerage. Keep me happy and I'm more likely to stay. Otherwise, I'm outta here!

 

[Tranquility Base]

Other than that and a "know your customer" meeting when we opened our first account with them 8 years ago, we've not talked to him.

Wow. That's interesting. I think I saw something somewhere online, probably on Schwab's website, that part of a FC's payment was some kind of relationship pay. So that left me with the impression or assumption that in order to receive relationship pay (however big or small that might be), that the FC had to build and maintain some kind of relationship with the customer. Not talking to a customer in 8 years probably isn't going to get them the relationship pay.

 

[Tranquility Base]

We have had named Schwab reps for a long time, maybe a couple of decades. I have used them mostly as tools to get things done or fixed, no more frequently than once a year. Rarely but usefully I have asked questions like "What does Schwab think about <some security or asset class>. For both types of purpose, they have been very high service, responding with an answer or a solution in a day or two. At no time have I solicited investment advice nor has it been offered. I am not even sure they are allowed to do that rather than refer customers to advisory options.

Somewhere along the line with the original FC I probably should have asked him what kinds of questions I could ask him, what kinds of questions he was able to answer (in terms of his qualifications) and what kinds of questions Schwab would permit him to answer. The very first conversation (giving background about myself and my plans) was interesting and useful. But I think the next one was limited to that damn 30 minutes and he was 10 minutes or so late for the phone conference.

 

[scrabbler1]

That's basically what I was hoping to do - meet periodically just to discuss my portfolio and general financial situation. I wanted to discuss it with him. He did say I could probably get an investment review of some kind for free, instead of the usual $300 (I think) charge. I'm curious though; how long did your meetings last?

Our meetings usually lasted one hour although I had some which lasted a little longer, up to 2 hours (that was a bad one I had with a pushy AE who was trying to poach me from another AE during a transition between AEs).

 

[Tranquility Base]

OP, it appears one of your concerns is the 30-40 minute meeting. I'm curious what you would like to cover with an hour+ meeting? Tax planning, investment advice, etc.? For example, "What does success look like to you"?

I'm kind at the other end of the spectrum as I prefer my 5 minute meeting every 5 years with my Fido advisor, but I get it that folks have different wants and needs.

I've been itching all day to reply to your post. But I was out of town all day so all I could do was mull over your question in my head. I've answered it a bit already in my replies to some of my previous posts. But let me elaborate.

I'm not sure if "What does success look like to you?" was a question you were directing to me or was an example of a question I might have wanted to ask the FC. I did want to ask the FC what my investments looked like to him. I know I have enough. I'm not someone with 10M of assets wondering if I have enough to retire. I'm already retired. But I want to maintain and grow what I have, even if much of it might simply be passing on to my children some day. I would be very interested in hearing the FC's ideas about what I was doing correctly, what I was doing incorrectly and where I could improve. Yes, we all like to have out egos stroked a bit. But I still wanted to hear his ideas and impressions.

Basically, I was looking for a discussion and the FC's comments on the investments I already had (too many positions and way more complicated than I think it ought to be at my age and given the amount involved).

I wanted input on my ideas on how to simplify things; what to trim and when to trim in order to avoid building up a big long term capital loss which would stick me with a long term capital loss carryover. Some things were obvious positions to sell because they were underperforming and it was time to sell them and move on. Some stocks were doing well and highly rated by everyone. But the positions were small and the gains could be used to offset the losses.

Schwab does have some online materials regarding a variety of issues. But the ones I have looked at are very brief and chances are if you are retired, have a decent amount of investments and are on a forum such as this one, you probably aren't going to learn much from those materials. They aren't clickbait, but they are very elementary.

I did manage to ask the FC once for his thoughts on ETFs versus mutual funds but the response was pretty brief and not very in depth.

I wanted the FC's input and opinions on bond funds versus individual bonds and the mess that both have been over the past few years. I had some specific investments (mutual funds) I wanted to discuss. These funds had upfront loads (water over the dam now of course) and medium to high expense ratios. But many of them had good Morningstar ratings which left me torn as to whether to sell them. VTI has an expense ratio of 0.03 I think. But I was hoping to ask the FC if that means that I should favor a nonmanaged index fund with a low ER over a managed fund with a higher ER that is doing pretty well, simply because of the low expense ratio.

Then there were some individual stocks for which Schwab's rating was often an outlier compared to the ratings from Morningstar and other rating services (such as LUV).

I wasn't intending to ask the FC what I should I do with any specific position in the sense that I was going to automatically follow his advice to sell or hold. I did want his input, thoughts, advice, etc., however, which I would then weigh along with everything else before making my decision.

When I asked about setting up a time to discuss the bonds and bond funds question, he emailed me and gave me someone else's name and number (someone in their bond section) to contact. But when I clicked on the appointment schedule button for that person I saw that appointments for him were limited to 30 minutes. At that point I immediately wondered "Why bother?" And I didn't bother because nothing of any substance could be discussed in 30 minutes.

So to wrap this up, I guess I was looking to build some rapport and a bit of a relationship with the FC, to the extent that makes any sense for someone who is trying to be a DIY investor. After all, even the DIY folks ask questions on this forum and like to hear the opinions of other knowledgeable people. But when I kept getting names and numbers of other people to contact, I just became even more DIY and didn't see any purpose in calling all over Schwab. That led me to wonder what the FC's role was and what use was the FC to me. Schwab is a big organization and I am new to it. So maybe I just didn't get the right FC this time. But now that FC #2 is even younger and less experienced, I am even less inclined to start running down a dead end.