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Schwab Termination Procedures Presented by Airgead Clann LLC

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Presentation on theme: "Schwab Termination Procedures Presented by Airgead Clann LLC"— Presentation transcript:

1 Schwab Termination Procedures Presented by Airgead Clann LLC
Why Charles Schwab is bad for business

2 Table of Contents Slide 3: Introduction Slide 4: Executive Summary
Slide 5: “No-Cause Termination” Section of Contract Slide 6: Contract Section About Respecting Adviser-Client Relationship. Slide 7: Letter to Client Slide 8: Letter to Adviser Slide 9: Comparative Analysis Slide 10: Competitor Policies Slide 11: Summary

3 Introduction Schwab Termination Procedures Presented by Airgead Clann LLC The financial world has been a place of rampant fear for the average client. They have dealt with market crashes as well as enormous scandals from the likes of Madoff, Stanford, and Corzine. We all know it is the responsibility of Independent Advisers to ensure client’s needs are met. Lately, however, it has become increasingly important for Advisers to protect the client from being unnecessarily fearful of what the media often reports. Despite what the “Talk to Chuck” ads imply, Charles Schwab perpetuates the fear-mongering in their termination procedures. They have a history of terminating Advisers without cause and sending a damaging letter to every one of the Adviser’s clients. Most clients become fearful. Some clients become angry. Other clients distrust the Adviser and look elsewhere for their asset management. This presentation (link) walks you through the procedure. For a copy of the Schwab-Adviser Agreement, click here For a copy of Schwab’s Adviser Termination Letter, click here For a copy of Schwab’s Letter to the Client, click here For a comparative analysis of how Schwab’s competitors do business, click here.

4 Executive Summary Schwab Termination Procedure Summary:
Schwab Termination Procedures Presented by Airgead Clann LLC On behalf of the entire investment community, we have compiled the following information to demonstrate how Charles Schwab has deliberately damaged Independent Advisers and invoked fear into the clients they intend to serve. Schwab not only violates the Adviser-Client relationship, they do so in such a demonstrative manner as to permanently scar the Adviser and the Client. Additionally, based on numerous phone conversations and documentation review, Schwab appears to be the only Custodian to act in this manner. It is our intention to disseminate this information to any and all Investment Advisers and Registered Reps. We also intend to receive feedback via our website (www.airgeadclann.net/chuck.html) from those who would like to share similar experiences. Schwab Termination Procedure Summary: Schwab makes the decision to terminate an independent advisor. Schwab calls the advisor and follows up with a letter. Schwab does not disclose to the advisor the reason for the action. Schwab announces that the decision is irrevocable, not subject to discussion, and FINAL. Schwab simultaneously sends a letter to every single client announcing the termination. The content, timing, clients selected and language of the client letter is determined solely by Schwab and not subject to advisor approval or even input. This entire process occurs on the same day….Simultaneously.  

5 No Cause Termination Schwab Termination Procedures Presented by Airgead Clann LLC As you can see, both parties agree to no-cause termination However, nowhere in the contract do they describe that procedure

6 Contract Section About Respecting Adviser-Client Relationship
Schwab Termination Procedures Presented by Airgead Clann LLC No-cause termination is the industry standard, but this section of the contract is vitally important to the Adviser. Schwab clearly violates this section by sending each client a letter.

7 Letter to Client Schwab Termination Procedures Presented by Airgead Clann LLC Place yourself in the shoes of a client who has seen nothing but headlines of financial turmoil. The client is not provided any reason for this action. The letter includes a lot of info that they will not understand, confusing and angering the client. The client rarely received communication from Schwab prior to this, which leaves them suspicious and fearful.

8 Letter to Adviser Schwab Termination Procedures Presented by Airgead Clann LLC Schwab gives no reason for the termination decision. Schwab gives 10 weeks to transfer all business out. They make it clear they will be communicating with your clients.

9 Comparative Analysis Schwab Termination Procedures Presented by Airgead Clann LLC We obtained similar counts of treatment by Schwab to other Advisers in the past. We obtained a copy of the letter TD Ameritrade sent to a terminated Adviser. NO letter was sent to clients. Every company on the list above sends a letter to the IA upon termination. Schwab is the ONLY company to simultaneously send a letter to the IA and the clients upon termination.

10 Competitors Policies Schwab Termination Procedures Presented by Airgead Clann LLC Fidelity: 90 days notice unless a fraud requires immediate action. As an example, when Custodians stopped housing alternative assets, Fidelity worked with their Advisers while Schwab sent out termination letters to Advisers AND Clients. TD Ameritrade issues a letter to the Adviser and sets up a phone call. In one case of alleged forgery against the Adviser, TD Ameritrade did not contact the clients. LPL will notify the Adviser, but not the clients. In one termination where the Adviser forged documents and reimbursed clients with personal money, no letter was sent to the clients. A Scottrade representative said they never send a letter to the clients upon termination.

11 Summary Schwab can terminate an IA at any time, without cause
Schwab Termination Procedures Presented by Airgead Clann LLC Schwab can terminate an IA at any time, without cause Schwab will send a letter to every client you have, damaging your relationships. Schwab clearly violates the Client-Adviser communication clause in their contract. Schwab has a history of terminating Advisers in this manner. Schwab is the only Custodian we have found that operates in this manner.


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