Schwab Loses Top Robo Exec to Morgan Stanley

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Charles Schwab lost a key executive who oversaw the launch of the firm's robo advisor to Morgan Stanley, company spokesmen confirmed.

Naureen Hassan, an executive vice president and leader of the Schwab's Intelligent Portfolios service, joined Morgan Stanley as chief digital officer for wealth management, a newly created position, a spokesman said. Hassan will oversee strategy and marketing of digital tools and platforms for the firm's roughly 16,000 financial advisors.

"Her record of successful innovation, bringing exceptional digital resources to financial advisors and clients, will sharpen our ability to compete for today’s high-net-worth individuals as well as those emerging in the next generation," Jim Rosenthal, Morgan Stanley's COO, said in a statement.

On a recent earnings call, CEO James Gorman said that Morgan Stanley would improve its pretax profit margins in wealth management from its current 20% to 25% in the coming years. One method of doing that would be to improve its digital offerings, Gorman said.

At Schwab, Neesha Hathi replaced Hassan in Investor Services, according to a spokesman, who confirmed Hassan's departure but did not respond to requests for additional comment. Hathi has been at Schwab for more than a decade and previously oversaw Schwab Performance Technologies in Schwab Advisor Services.

Hassan, who had been with Schwab since 2003, could not be reached for comment. She left Schwab just days after being featured prominently in a New York Times personal finance story on how robo advisor services stack up.

But her high-profile departure may not be a major blow to the firm's plans to grow its robo service.

"Even if Charles Schwab were to lose a key person in the robo advisor effort, I would still assume that they are very committed to their robo service," says Michael Wong, an analyst at Morningstar.

Alois Pirker, research director at Aite Group, noted that perhaps the hardest part – developing and actually launching a robo advisor – is done.

"If she quit a year ago or a year and a half ago, it would have been worse. Their strategy in place now is about improving the positioning and adoption of it. At the end of the day, they've launched it and they are out of the gate. Everyone knows how they are positioned," Pirker says.

Chip Roame, manager partner at Tiburon, adds that her departure shouldn't hurt Schwab growth trajectory.

"The Tiburon view is that the discount brokerage firms (Schwab, Vanguard, TD Amtd) will predominantly win the robo race. A few of the VC backed firms (Betterment, Personal Capital) may also survive but the larger AUM will flow to the former," Roame said.


Hassan's experience in digital technologies could be a boon for Morgan Stanley.

"I could see that with her experience, if other firms want to launch something similar then they might want to get her on board," says Pirker, who was interviewed before it was confirmed that Morgan Stanley had hired her.

Sean McDermott, an analyst at Corporate Insight, who also spoke before confirmation of her move to Morgan, says she'd be a valuable asset to any firm that desires to develop a platform similar to that of Schwab. But there would be hurdles, he adds.

"Assuming she's going to a firm that hasn't developed a robo platform, then they will be facing unique challenges. Schwab was an early entrant," McDermott says. "If she is going to another firm that hasn't developed a [robo] platform yet, then they will be a relatively late entrant to the market."

Recruiter Danny Sarch, who was not involved with the move and does not know Hassan, says that her departure coming on the heels of her appearance in the Times could be just coincidence.

"I always put myself in the shoes of the individual. How long does a piece in the Times take to get done? I'm sure she didn't want to make the firm look badly, but when you're ready to resign, you're ready to resign," Sarch says.

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