Cryptocurrencies Not Currently on Charles Schwab's Radar

According to a report published on 7 September 2019 by RIABiz, American financial services giant Charles Schwab is not ready to embrace cryptocurrencies just yet, considering them "a purely speculative instrument."

The San Francisco-headquartered Charles Schwab Corporation was founded in 1971, and it serves 3 groups:

  • Individual Investors: Over 365 branches and 1,200 financial consultants; 
  • Independent Registered Investment Advisors: serving over 8,000 advisors, with $1.75 trillion in client assets; and 
  • Employers: "Over 4 million retirement plan participants served directly and through independent recordkeepers" (over $150 billion in assets).

The report says that Charles Schwab CEO Walt Bettingers is taking a very conservative approach toward cryptocurrencies while its rivals, such as Fidelity Investments and TD Ameritrade and rushing "to create crypto-currency trading and custody platforms." 

Rob Farmer, Managing Director, Corporate Communications at Charles Schwab, told RIABiz via email:

Investors should view these currencies as a purely speculative instrument.

Timothy Welsh, President and Founder of Nexus Strategy, LLC, "a leading consulting firm to the wealth management industry," told RIABIz via email:

Walt got his job by being the king of the status quo. He’ll never willingly upset the apple-cart, unless the market forces him to do so. Until [Schwab's] biggest advisors demand they do something, they will continue their sleepwalk through innovation.

RIABiz says that it's perhaps not surprising that Schwab is not getting too excited about a market worth no more than around $300 billion when this amount is equivalent to roughly 10% of its $3.2 trillion assets under management (AUM). 

William Trout, Head of Wealth Management at Celent, a division of global technology consulting firm Oliver Wyman, told RIABiz via email:

In the short to medium term, [Schwab's] missing an opportunity. Schwab will be forced to move into the space at some point, although most likely in a small way, custody of client assets or a stake in an exchange.

The RIABIz report also mentions that one of its sources says that Charles Schwab rival Fidelity Investments has "200 employees, mostly developers, dedicated to its crypto efforts," and that although Fidelity is focused on offering crypto custody and trading right now, it is "preparing to enable margin purchases and shorting."

Terrence Dempsey, Product Manager at Fidelity Digital Assets, says:

[Having] products and services that are out there [on the market] today ... give[s] us a bit of an advantage versus some of the more traditional trading and custody providers. We’re not going to stop at just offering custody and trading, we’re really focused on becoming a full service institutional brokerage platform for digital assets ... [just as] other folks are just getting up to speed and offering the first or second pieces of product.

 

Featured Image Courtesy of Charles Schwab