Role of Financial Consultant at Discount Brokerages

[target2019]

The role of the FC is to provide an initial or followup human expperience to those who need such.

He/she is to act as a greeter who can steer you into specific knowledge bases that exist.

The FC is not to get involved in decision-making details.

Above probably fits all of the institutions. I never worked for any of these companies, but I've read a bit about CS philosophy. Questions like why is Schwab rating individual companies differently than Morningstar are beyong what a company spokesperson can answer.

 

[teej1985]

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.

How much does one need to have at Schwab to get one of these people assigned to them? Is it automatic after your account grows enough?

 

[OldShooter]

How much does one need to have at Schwab to get one of these people assigned to them? Is it automatic after your account grows enough?

A year or two ago I was told there were two levels, $1M and $10M that get assigned reps. $!M was called "Pinnacle" and handled locally. AT $10M the client was handled by reps in NY.

 

[teej1985]

A year or two ago I was told there were two levels, $1M and $10M that get assigned reps. $!M was called "Pinnacle" and handled locally. AT $10M the client was handled by reps in NY.

The former employee I quoted stated you get more perks at $1M, suggesting you get something below it...?

 

[OldShooter]

The former employee I quoted stated you get more perks at $1M, suggesting you get something below it...?

I dunno. It's been a long time since we were under $1M with them. Why don't you just call and ask?

 

[teej1985]

I dunno. It's been a long time since we were under $1M with them. Why don't you just call and ask?

Because the person commented here and may know. I don't care enough to call them or even ask in online chat.

Edit: I cared enough to google though. This website says: "Dedicated Financial Consultants are generally made available to clients with $500,000 or more in assets at Schwab"

https://www.schwab.com/invest-with-us/professional-advice


$1M gets you "private client":

https://www.schwab.com/wealth-management/private-client-services

 

[MikeTN]

My Schwab consultant once notified me I had not named a beneficiary for one of my accounts. He helps with transfers in, and in setting up a trust account. But the main reason I value him is that my wife leaves the investment stuff to me. If I die before she does she knows she can contact him to explain the accounts and how to access them. My executor has his contact info as well.

 

[youbet]

A year or two ago I was told there were two levels, $1M and $10M that get assigned reps. $!M was called "Pinnacle" and handled locally. AT $10M the client was handled by reps in NY.

I thought it was the $10M level that was called "Pinnacle." Your rep is still local but your phone calls are automatically directed to a special team of their more experienced folks.

They really aren't very transparent about these levels or the benefits pertaining to them. This thread has peaked my curiosity and I'm going to press my rep for details.

 

[Ncc1701]

The minimum to be “practice eligible” for a FC is $500K in household assets. Enrollment is not automatic. Also, you may be in a FCs “Active” practice or “Marketing” practice and you wouldn’t know. Active practice clients impact a FCs pay, marketing does not. If you take out large sums of money frequently, you can bet you will be in Marketing Practice….lol.

The “pinnacle” reps you are referring to are phone based reps who have more experience and knowledge than other phone based reps. Not all households are automatically enrolled in Pinnacle but you must have at least $1M in household assets to qualify. Your phone calls will be routed to that team if you’re household is enrolled in Pinnacle

Don’t be fooled with the term “Private Client”. It is not a tier. It is a fee based advisory service that is now called SWIA - Schwab Wealth Investment Advisory.

There are two levels of FC - Associate and VP. Most are VP but the younger newbies are associates who usually after 2 years in the role are promoted to VP. Most branches have 5-6 VP FCs and 1 AFC

 

[teej1985]

The minimum to be “practice eligible” for a FC is $500K in household assets. Enrollment is not automatic. Also, you may be in a FCs “Active” practice or “Marketing” practice and you wouldn’t know. Active practice clients impact a FCs pay, marketing does not. If you take out large sums of money frequently, you can bet you will be in Marketing Practice….lol.

The “pinnacle” reps you are referring to are phone based reps who have more experience and knowledge than other phone based reps. Not all households are automatically enrolled in Pinnacle but you must have at least $1M in household assets to qualify. Your phone calls will be routed to that team if you’re household is enrolled in Pinnacle

Don’t be fooled with the term “Private Client”. It is not a tier. It is a fee based advisory service that is now called SWIA - Schwab Wealth Investment Advisory.

There are two levels of FC - Associate and VP. Most are VP but the younger newbies are associates who usually after 2 years in the role are promoted to VP. Most branches have 5-6 VP FCs and 1 AFC

There have been some rumors that you can get some mutual fund families fees waived such as Vanguard's at Schwab on some sort of permanent basis. what's the strategy for that? Can anybody who has a dedicated rep basically get that?

How do you "enroll" since it's not automatic? Just call Schwab and tell them you want one? Or can you contact a person at a Schwab office and have them take you?

 

[youbet]

The “pinnacle” reps you are referring to are phone based reps who have more experience and knowledge than other phone based reps. Not all households are automatically enrolled in Pinnacle but you must have at least $1M in household assets to qualify. Your phone calls will be routed to that team if you’re household is enrolled in Pinnacle

Is there a level at $10M as rumored?

 

[OldShooter]

... They really aren't very transparent about these levels or the benefits pertaining to them. ...

True. My guess is that they don't publicize them because the thresholds change from time to time. Like you, I became curious one time and asked my guy. He was happy to explain. In addition to having an assigned rep, I do like the special team telephone support. A call gets answered pretty quickly and the reps are effective at handling my usually-simple needs.

 

[Ncc1701]

There have been some rumors that you can get some mutual fund families fees waived such as Vanguard's at Schwab on some sort of permanent basis. what's the strategy for that? Can anybody who has a dedicated rep basically get that?

How do you "enroll" since it's not automatic? Just call Schwab and tell them you want one? Or can you contact a person at a Schwab office and have them take you?

If you have at least $1M, just walk into the branch and ask for the Vanguard mutual fund fee waiver program. Don’t try by phone, it most likely won’t work

 

[Ncc1701]

Is there a level at $10M as rumored?

So at $10m you really can’t be in a FCs marketing practice. They force the FCs to put those clients in Active practice in order to have skin in the game and retain those clients. But there is no specific tier.

At $25M, you can get “Chairman’s Circle” benefits with access to high level estate planning, charitable planning and other specialists.

 

[rodi]

My sister and I are both at Schwab. We have the same Veep FC.

My sister prefers more hand-holding and has a big chunk of her money in a managed account because she doesn't want to bother rebalancing, etc. Our FC calls her once a month - probably because she has managed money and because my sister wants the monthly check in.

I get a phone call or email once a quarter, checking in. I tried the managed money thing on 25% of my money for 1 year, and decided I didn't like paying for it and moved it back into my remaining money's lazy portfolio.

The FC is always happy to hear from me... She reviewed our retirement plan before I retired. She's happy to help me when I have a question on something I haven't done before (eg wire transfer). We have kids about the same age, so we compare notes. But I don't really use her FC services...

I've gotten a few 'freebies' from her over the years - a cooking class, a baseball game....

 

[mystang52]

My first FC, with Vanguard, was invaluable to me. He guided me in the last couple of years before my retirement, and the first years after retirement. Then he left, and I had 2, or maybe it was 3, replacements. None of those replacements called me, or even sent email. Now, of course, there is no assigned FC with Vanguard. Either the original FC set me up so well, or I just got smart enough, but in any event I haven't missed not having an FC.

 

[RetiredAt49]

My first FC, with Vanguard, was invaluable to me. He guided me in the last couple of years before my retirement, and the first years after retirement. Then he left, and I had 2, or maybe it was 3, replacements. None of those replacements called me, or even sent email. Now, of course, there is no assigned FC with Vanguard. Either the original FC set me up so well, or I just got smart enough, but in any event I haven't missed not having an FC.

Just curious… what exactly did your FC do to help you before and after retirement?

 

[mystang52]

Just curious… what exactly did your FC do to help you before and after retirement?

First, he actually listened to me when I explained my retirement needs, wants, etc., including my "sleep-at-night" needs financially. He then had me downsize my gazillion investments to just a few [of course, within Vanguard] keeping in mind my aforementioned needs. When I was within a year of my target date I was fully confident, thanks to some of his ongoing guidance. He never pushed any concepts outside of what I wanted. There was more, but these were the main points.

 

[NanoSour]

Role of Financial Consultant at Discount Brokerages?

To separate you from your money. Nothing but salespeople. As are 99% of the people who work in the financial services industry.


Average individual investor only makes half of what the market returns. The other half goes to all those financial services people.



https://seekingalpha.com/article/4108688-investor-returns-vs-market-returns-failure-endures

 

[OldShooter]

Role of Financial Consultant at Discount Brokerages? To separate you from your money. Nothing but salespeople. As are 99% of the people who work in the financial services industry.

Factually inaccurate. Possibly you have no experience with these guys or have experience with a bad one.

Average individual investor only makes half of what the market returns. The other half goes to all those financial services people.

I have seen even lower numbers, but actually the wounds are largely self-inflicted by excessive trading, speculating instead of investing, and attempting to time the market. AUM fees do contribute to the problem, tho.

 

[NanoSour]

Factually inaccurate. Possibly you have no experience with these guys or have experience with a bad one.

I have seen even lower numbers, but actually the wounds are largely self-inflicted by excessive trading, speculating instead of investing, and attempting to time the market. AUM fees do contribute to the problem, tho.

I'll have to respectfully disagree with OldShooter. The majority of the market from the individual perspective is dominated by over 50 year olds who have finally had the opportunity to accumulate a couple hundred thousand, either in a 401K or 403b or IRAs. Then, when they are finished raising a family and living life, they begin to face the prospect of retirement on the near horizon and look to a financial guy, you know "he's my guy," really smart, uses big words, sends birthday and XMas cards, and with a great track record that he/she wouldn't dare make public. They take your typical $200-300K and put you in 15-30 different assets for "diversification" as if they have some crystal ball on these 30 issues. A very rare few know anything about the companies/mutual funds they put your money in, nor could they read a Fortune 100 balance sheet or income statement to save their lives. Now for the pleasure they'll take their 1-2% AUM and tell you it's a small amount just to keep the lights on and heat their office.

Here's an example from Empowers Fee Analyzer of a $130k account paying 1.35% AUM and avg fund expense ratio of 0.50%, which they'll tell you is low. At a rate of return of 5.2% for a moderate risk portfolio you make $4400 and the total fees paid are $2400. In this case you are giving up 35% of your return for this risk level. You are at 3.4% return before inflation. BTW, this number coincides pretty close to the Schwab Intelligent Portfolio performance. When they are trying to sell you on investing they'll use S&P return of say 8%, and therefore, compared to the market you are getting over 50% less.

I'm very familiar with how the financial services industry works and what you have to remember is, it is your money that is paying for everything about the lifestyle of your guy. His home, car(s), luxury vacations, private schools, second home in Colorado, etc, etc. Hopefully, and my wish is that, people finally wake up and realize this is not rocket science and you can do this on your own and stop the fleecing.

 

[teej1985]

I'll have to respectfully disagree with OldShooter. The majority of the market from the individual perspective is dominated by over 50 year olds who have finally had the opportunity to accumulate a couple hundred thousand, either in a 401K or 403b or IRAs. Then, when they are finished raising a family and living life, they begin to face the prospect of retirement on the near horizon and look to a financial guy, you know "he's my guy," really smart, uses big words, sends birthday and XMas cards, and with a great track record that he/she wouldn't dare make public. They take your typical $200-300K and put you in 15-30 different assets for "diversification" as if they have some crystal ball on these 30 issues. A very rare few know anything about the companies/mutual funds they put your money in, nor could they read a Fortune 100 balance sheet or income statement to save their lives. Now for the pleasure they'll take their 1-2% AUM and tell you it's a small amount just to keep the lights on and heat their office.

Here's an example from Empowers Fee Analyzer of a $130k account paying 1.35% AUM and avg fund expense ratio of 0.50%, which they'll tell you is low. At a rate of return of 5.2% for a moderate risk portfolio you make $4400 and the total fees paid are $2400. In this case you are giving up 35% of your return for this risk level. You are at 3.4% return before inflation. BTW, this number coincides pretty close to the Schwab Intelligent Portfolio performance. When they are trying to sell you on investing they'll use S&P return of say 8%, and therefore, compared to the market you are getting over 50% less.

I'm very familiar with how the financial services industry works and what you have to remember is, it is your money that is paying for everything about the lifestyle of your guy. His home, car(s), luxury vacations, private schools, second home in Colorado, etc, etc. Hopefully, and my wish is that, people finally wake up and realize this is not rocket science and you can do this on your own and stop the fleecing.

You're equating the industry as a whole to one specific job position at Schwab.

 

[OldShooter]

I'll have to respectfully disagree with OldShooter. ...

We don't disagree on your major points in the post immediately above. But you said that 99% of the people in the industry are salespeople and that is just silly. Admin support, back room, IT, HR, ... Lots of jobs have nothing to do with sales.

As far as the assigned reps, of course they are sales people, but job #1 is to keep each customer happy and his assets with the rep's employer. So a smart rep will concentrate on keeping and growing assets from customers where he can have an effect, having figured out long ago that some of us are not candidates for upsells, thus are basically time-wasters.

Sadly, I think your dream of people learning that DIY is easy is doomed. I know many smart people who don't want to make the effort or who have been intimidated by the industry's successful efforts to convince the market that they must hire industry priests and witches if they want to successfully invest.

Here is a chart I use in my Adult-Ed investing class and have posted here before:

​

 

[aja8888]

I'll have to respectfully disagree with OldShooter. The majority of the market from the individual perspective is dominated by over 50 year olds who have finally had the opportunity to accumulate a couple hundred thousand, either in a 401K or 403b or IRAs. Then, when they are finished raising a family and living life, they begin to face the prospect of retirement on the near horizon and look to a financial guy, you know "he's my guy," really smart, uses big words, sends birthday and XMas cards, and with a great track record that he/she wouldn't dare make public. They take your typical $200-300K and put you in 15-30 different assets for "diversification" as if they have some crystal ball on these 30 issues. A very rare few know anything about the companies/mutual funds they put your money in, nor could they read a Fortune 100 balance sheet or income statement to save their lives. Now for the pleasure they'll take their 1-2% AUM and tell you it's a small amount just to keep the lights on and heat their office.

Here's an example from Empowers Fee Analyzer of a $130k account paying 1.35% AUM and avg fund expense ratio of 0.50%, which they'll tell you is low. At a rate of return of 5.2% for a moderate risk portfolio you make $4400 and the total fees paid are $2400. In this case you are giving up 35% of your return for this risk level. You are at 3.4% return before inflation. BTW, this number coincides pretty close to the Schwab Intelligent Portfolio performance. When they are trying to sell you on investing they'll use S&P return of say 8%, and therefore, compared to the market you are getting over 50% less.

I'm very familiar with how the financial services industry works and what you have to remember is, it is your money that is paying for everything about the lifestyle of your guy. His home, car(s), luxury vacations, private schools, second home in Colorado, etc, etc. Hopefully, and my wish is that, people finally wake up and realize this is not rocket science and you can do this on your own and stop the fleecing.

This sounds very much like the accounts my SIL had at Edward Jones this Spring. When she asked me to look at them, she was down roughly 15 - 20% over the last year (2021-2022).

I asked her "guy" on a joint phone call a few pointed questions as to why he had a $200 K brokerage account and a $20 K IRA in two dozen mutual funds and bond funds and he went postal. We never did get to discuss the big loss of value. We immediately moved the accounts to Schwab and I put her in fixed income as that made her comfort level much better.

What scumbags some of these FA's are. They were milking her with monthly "program" fees which were not shown on the monthly statement. They also talked her into selling her Apple stock (~60 shares) at its low in 2022 (had a large gain in it) to use to offset the big losses in bond and mutual funds. Interestingly, they sold the Apple at about $130/share and charged her $200 for the transaction. They hid that $200 in the shown (on the monthly statement) sale price of the stock. I dug out the actual transaction by digging through all the transactions for the month of the sale. Slimeballs!

 

[GravitySucks]

I’ve had the same guy at Fido for 11 years. Nice guy. Gives some decent advice and guidance. Helped run me through the various tools on their website.

Mostly, I believe, he is there to keep my money at Fido. A retention specialist. He schedules an hour call once a year that I usually end at 20 minutes unless I have questions,and I can call anytime. He does a good job of keeping me happy with Fidelity’s service.