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Wednesday, November 15, 2017

Walt, Unscripted

Reported by Neil Anderson, Managing Editor

Walt Bettinger predicts more brokerage industry consolidation and is even open to being a part of it.

That's one topic among many that the Charles Schwab CEO discussed this morning on stage at Impact 2017 in an unscripted, 100-percent audience Q&A keynote session with Bernie Clark, executive vice president and head of Schwab Advisor Services. Impact Is being held at the McCormick Place convention center in Chicago.

Bettinger told RIAs and other Impact attendees that "you have to expect ... continued, ongoing consolidation" in the brokerage industry.

"It's an industry, at the brokerage firm level, the investment services level, that certainly seems to have excess capacity," Bettinger said.

"We will continue to look at every opportunity that comes along," Bettinger added. "Our criteria is not simply economic. We also want to see a strategic fit."

Bettinger is also apparently hearing lots of technology acquisition pitches.

"Being based in San Francisco and with a $60 billion market cap, the list of fintech companies that has come to us and suggested we buy them is probably longer than the list that hasn't," Bettinger said.

Prompted by audience-submitted questions (which were also voted on by the audience such that the more popular questions were field), Bettinger and Clark discussed millennials.

"There are going to be differences," Bettinger said, but "People will still be the determining factor in terms of long-term success."

"If you don't like the millennials, blame yourself because you created them," Clark quipped, quoting an unnamed industry friend.

On cybersecurity, Bettinger called the issue "the challenge of our era" in business. Yet he also warned against those offering certain protection.

"Guaranteeing protection against cybersecurity is akin to guaranteeing the ability to time the market," Bettinger said.

Other topics Bettinger and Clark addressed included: the growing importance of HSAs (Bettinger thinks everyone will have HSAs soon enough), the balancing of technology and people, the growth of Schwab's roboadvisor services ($25 billion and counting), blockchain and cryptocurrency, the rise of AI ("I mean artificial intelligence, not alternative investments," Clark quipped), the importance of training the next generation of advisors, the fall in commissions (Bettinger doesn't want to go to $0 trades), Morgan Stanley leaving the broker protocol (Clark called the wirehouse an organization that thinks it can "lock people down"), and more. Clark even apologized for the chilly weather (some audience members asked why Impact is often in cold weather cities in the fall, though last year it was in San Diego), and he categorically shut down the idea of Impact ever returning to Las Vegas (with no explanation).

This is Bettinger's 24th time at Impact, and he closed the session by reminding RIAs about their purpose.

"The risk in our biz, in every biz, is that we lose sight of what we're here for, and that's to serve other people," Bettinger said. "We have to remember that we're in the biz always, every day, of serving other people." 

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