Schwab Exec Discusses Future Initiatives

Dave Gray, as vice president of client experience for Charles Schwab, is tasked with looking holistically across business units and product offerings to track and measure how clients interact with and view the firm.

It’s interesting and sometimes challenging work, he suggests, and gives him a clear picture of where a wide variety of sales and service trends are heading. Not a big surprise, Gray says technology development and integration was easily a top trend for 2015 and will almost certainly be a prevalent theme next year.

Firms in the advisory and recordkeeping space will continue to add transaction capabilities to mobile applications, in particular, Gray tells PLANADVISER, noting that Charles Schwab and several other firms added such transaction capabilities to their offerings for the first time this year.

“During the course of 2015 we have seen a major industry move to consider deeply mobile apps and alternative ways of communicating with and making decisions in the plan,” Gray explains. “At Schwab, we’ve had a mobile app since 2011 and we have focused mainly on ease of use in that time, but more recently, in the last year, we have rolled out transaction capabilities on the mobile apps. Deferral changes, rebalances, allocation changes, etc. Whatever the participant wants to do, we want to enable that with the mobile application.”

Gray says the major boon of mobile app technology with regards to retirement planning is that it allows individuals to take action “right away, in the moment.”

“Why is this important?” Gray asks. “Because participants want to take action in the moment. It’s a valuable thing—when you’re thinking about your plan, which maybe doesn’t happen that often for a given individual—to be able to pull out the smartphone and make changes in real time as you think about them. It’s more effective than expecting an individual to wait for the next work day or go to their desktop computer.”

NEXT: Mobile builds engagement 

When assessing mobile app usage stats at Schwab, Gray says there is a clear trend that, once an account holder engages with the firms’ apps, they almost invariably go on to interact more with their retirement account in general than somebody that strictly uses the Internet on a desktop.

“Once they go to the mobile app we see the level of engagement increase, dramatically in many cases, which is just another reason why we want to help people take action in the moment,” Gray says. “That’s why we’ve also been moving forward on one-click enrollment. Once a participant who is not already enrolled goes into the mobile app, they’re presented with default elections that allow them to join the plan with just one push of the button. It’s a very effective way to get them to commit to the first savings decision.”

Gray suggests “we’re still somewhat on the front-end of mobile devices becoming the normal pathway for retirement plan communications,” but defined contribution (DC) plan sponsors and advisers already recognize the direction things are moving. As Gray puts it, they’re seeking technology that can enable people to “make the right savings and investment choices over time, so they can be ready for their financial future.”

“That’s the common thread of technology investment for a company like Schwab,” he adds.  

In terms of which providers are doing better than others on the technology arms race, Gray says there is a lot of encouraging innovation all across the market, but firms will do best by paying close attention to the way specific pieces of technology are really being used.

“On first blush it seems right to lump in tablets and anything mobile into the same heading of ‘technology,’ but when you dig into the numbers you see there are important differences in the ways people use phones versus tables and other devices,” Gray explains. “These differences are critically important when putting together a technology package. One question sponsors should look at: Is this an app specific to a device that can truly capture and improve the client experience? Or is it just a website viewed through the device?”

NEXT: Tech doesn’t replace personal touch 

Gray agrees with other researchers who have recently told PLANADVISER that technology development and integration is not an all-or-nothing game.

“Core to our beliefs and approach is, in the end, when it comes to financial decisions, people still want people to engage with and trust,” Gray says. “This holds true on the technology side too—it enables the connection between people. We don’t view technology as a replacement for people.”

With this in mind, one interesting initiative for Schwab heading into 2016 is the ongoing expansion of a participant learning portal, described by Gray as “an interactive content delivery portal plugged into the participant website.”

“The great feature here is that the portal allows participants’ viewership of materials and content to be tracked and awarded with points—ultimately tying this directly into the employer’s wellness programs,” Gray says. “It also provides a social rating aspect so we can see how the clients are thinking about the content and judging the content, individually and as a group. That’s something I’m really excited about for 2016.”

Gray says other points of client service focus for Schwab next year will be “leveraging technology for the ongoing creation of what we are calling adviser-friendly managed accounts,” as well as continued innovation around “plan sponsors’ decisions about how they want to allocate costs and handle remuneration that comes from mutual funds—bringing what people sometimes think of as more fairness to the process to buying mutual funds in a plan and paying for them.”

This will include greater flexibility for plan sponsors to have revenue sharing credited back to participants based on the actual participants’ asset allocations that generated that revenues sharing, he says.