Adam Nash, the CEO of WealthFront.com, recently made a simple observation:
Schwab has thrown their clients under the bus.
The irony is that Schwab has 4 transcendent values:
- No conflicts of interest
- No advice
- No sales
- Customers first
But what happened to their “transcendent values” when they filed their recent disclosure brochure?
The document highlights a unique cash-sweep program that could costs clients upwards of 75bps. Moreover, the cost transparency on this setup is on par with the transparency of a covert CIA paramilitary operation.
Transcendent values get eaten alive when distribution economics take over. Schwab, like the big banks, cannot maintain a “no conflicts of interest” mantra and simultaneously be a full-scale distribution platform.
The incentives simply don’t add up.
And when in doubt, as Nash so eloquently states, “Follow the money.”
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