Managed Account Distribution: The Independent Advisor Opportunity

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Managed Account DistributionThe Independent
Advisor Opportunity

• John Morris, Senior Vice President
• Managed Accounts

Charles Schwab Co., Inc., (Schwab) Member
SIPC/NYSE (0404-00420)
The information in this presentation is for
informational purposes only. The data is subject
to change and is not indicative of future results.
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The Advisor Opportunity is Large ? and Growing
Currently, 12,000 Advisors, 1.5 Trillion Assets
in the Industry
Primary Financial Advisor Total Affluent Market
(of those that use a professional advisor)
20 decline
Sources Cerulli Report, The State of the Retail
Registered Investment Advisor Market, 2002.
Spectrem Group, The New Wealth Advisor report,
November 20, 2003
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The Significance Of Advice At Schwab
Individual Investors AND their Investment
Advisors are the core of Schwab
Charles Schwab Total Assets 967B

Source 2003 Annual Report
4
Advisor Practices Vary
Receptivity Depends On Composition Of Their
Practice
Advisor Focus
Advisor Usage
Managed Account Participation
Use by Asset Type
Information as of March 31, 2004
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1,250 Growth Over 5 Years
Information as of March 31, 2004
6
Larger Advisors More Inclined to Use Managed
Accounts
Bigger Firms Getting Bigger By Having Bigger
Clients
Information as of March 31, 2004
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Open Architecture and Flexibility are Key
Majority Of Assets In Unbundled Services

• 36 Money managers, representing 46 strategies
• Callan research
• Bundled fees

Managed Account Select
Bundled
Unbundled

• 73 Money managers
• Managers agree to specific criteria

Managed Account Connection

• Over 613 money managers
• Freedom to work with virtually any manager
• Flexible fees and minimums

Managed Account Marketplace
Information as of March 31, 2004
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The Independent Advisor
Distribution Challenges

• Harder to find
• Require a different service model
• Fiercely independent, entrepreneurial
• And, still, a lack of awareness of how/when to
  use managed accounts

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The Independent Advisor
Addressing Distribution Challenges

• Leverage other asset management capabilities AND
  managed accounts
• Open architecture programs are key
• Need to provide training, education, and practice
  management
• Look for firms that want to grow or that
  recognize they are vulnerable
• Use your highest quality service professionals
• Breadth and depth of products and services