Products October 29, 2007

Schwab Offers New Trust Services for RIAs

Schwab Institutional, a provider of custodial, operational, and trading support for independent investment advisors, has announced new services designed to help advisers retain the management of trust assets.
Reported by
Schwab’s new custom-built Personal Trust Reporting Service enables advisers to offer a fully integrated trust accounting and trading platform for their clients who act as trustees, providing:
  • Principal and income reporting and trust accounting;
  • Separate, periodic trust reports;
  • Tax lot accounting;
  • Scheduled payment to beneficiaries (calculated and fixed);
  • Recordkeeping for personal tangible property owned by the trust, not held by Schwab Institutional; and
  • Tax worksheet creation and optional tax preparation.
“By providing individual trustees with complex accounting, recordkeeping, and reporting for trust accounts, we are helping advisers win and retain assets even as they are transferred from generation to generation,” said Cathy Clauson, vice president of Schwab Institutional, in a company announcement.
For advisers who wish to work with Schwab as a corporate or directed trustee, the new Administrative Trustee Service enables them to focus on investment management while Schwab Bank handles the administrative fiduciary duties of the trust. The fully integrated trust accounting and trading platform offers:
  • Favorable trust status;
  • Principal and income distributions;
  • Accounting and recordkeeping; and
  • Preparation and filing of federal and state taxes and distribution of K-1s to beneficiaries.
Charles Schwab Bank Personal Trust will be a division of Charles Schwab Bank and is pending regulatory approval, the announcement said.
More about Schwab Institutional is at www.schwabinstitutional.com.
Deals & People October 29, 2007

O'Neal Leaving Merrill

Following billions of dollars in write-downs and an unauthorized look to Wachovia Corp. for a possible merger, Stan O'Neal will reportedly be leaving his post as CEO of Merrill Lynch.
Reported by

Last week, Merrill revealed much more significant write-downs than had previously been reported stemming from the subprime mortgage crisis this summer, totaling $8.4 billion.

Then on Friday, a report in the New York Times suggested that O’Neal had approached Wachovia about merging the firms, news that was not taken well by the Merrill Lynch board, which had reportedly not been approached about the idea.

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On Sunday, the New York Times and the Wall Street Journal published reports saying the board had decided to force O’Neal out.

Finances

The firm also reported a $2.24 billion loss in the third quarter, approximately six times more than O’Neal had reported in early October. According to reports, analysts are predicting those numbers could be even higher. According to Bloomberg, CIBC World Markets is predicting that Merrill may have to cut the value of its holdings by an additional $4 billion in the fourth quarter, and analysts at Goldman, UBS AG, Wachovia, and Sanford C. Bernstein & Co. cut their recommendations on Merrill from the equivalent of buy to hold.

The revenue make-up of the firm has changed under O’Neal’s tenure, Bloomberg reported, saying that last year, Merrill’s brokerage produced just 34.9% of revenue, a noticeable decrease from 49.3% recorded in 2002, the year O’Neal took over as CEO, leaving his position as head of the brokerage division. Further, Bloomberg said, under O’Neal, net income rose 47% last year to a record $7.5 billion, and O’Neal took home $48 million in compensation.

Possible Replacements

According to a Wall Street Journal report, possible contenders for O’Neal’s replacement include Laurence D. Fink, CEO of BlackRock, Gregory Fleming, Merrill’s co-president, and Bob McCann, who leads Merrill’s brokerage division. The Journal speculated there could also be a deal where Fink and Fleming have a power-sharing agreement.

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