Few intermediaries have provided as much impact for mutual fund companies as The Charles Schwab Corporation.

While the company operates two families of proprietary funds, the Schwab Funds and Laudus Funds, most are from "third parties."

The company markets more than 16,000 mutual funds available to its mainstream American clientele. Roughly $685 billion in assets are held in those funds, in 18.1 million positions.

And fees from running or selling mutual funds accounted for $1.1 billion of its $4.7 billion in revenue in 2011.

But the San Francisco company has not made it easy for fund families to work through its online platform. Or, rather, the multiple platforms that it "forces" its business partners to use.

That's about to change, if Doug Hanson, its vice president of shared strategic services, and other Schwab executives have their way. They want to "enhance interactions" between mutual fund firms and their company.

Their tools? A new "gateway'' that will make it easier for investment managers to get access to information from Schwab on how their products are faring, with Schwab's retail customers across the country. And insight into how that performance compares to results being achieved by other fund families, through Schwab.


First up is the Charles Schwab Investment Manager Gateway. This is a "meta" portal that will make it easier for investment managers to use a single set of user names and passwords to get to different sales reporting, activity and event sites that Schwab maintains.

"We have launched five separate secure web sites that we have firms work through. We are about to launch a sixth,'' Hanson said. And, tongue in cheek, he said, "it's fabulous that none of them actually talk to one other. They're all independently built at different times by different people who were well-intended but had no intention of making them play with one another.''

These have included a sales reporting site called FundMap, a daily trade reporting site called Schwab Trade Activity Portal, a site devoted to the information sharing requirements of Rule 22c-2 of the Investment Company Act of 1940, a Fund Add & Maintenance Portal (FAMP), the Schwab Insights Publisher and Schwab Managed Account Central.

Updating the sites hasn't been an option, given economic constraints of the last six to eight years, Hanson said.

But concerns about the security of the sites have given rise to some spending that can be leveraged to improve interaction with fund families, in the process.

Thus arrives the Schwab Investment Manager Gateway, which will ride on top of the other sites. The gateway will allow investment managers to sign in once and gain access to any of the sites that it is authorized to use.

"For us, it will leapfrog us from where we are today,'' said Hanson. "I've been calling what we're doing, we've been creating the foyer to the house that has many rooms. Those rooms are all those other web sites.''

This will launch by the end of June, making it easier to use Schwab services efficiently.

"It'll make it easier for folks to interact with us. There will be one place to come, one place to log in,'' Hanson said. "Once you get there, you can easily move between the sites. You'll have permission to either enter or not enter those sites, depending on the nature of your participation, how your firm interacts with us.''

That brings in a second part of the overhaul: Making it easier for a mutual fund operator to see just how well Schwab is doing at moving its products.

For this, Schwab has been working with a unit of Broadridge Financial Solutions, known as Access Data.

Schwab is using an Access Data product called SalesVision as a pivot point to deliver a wide range of information that will let fund families see not just how well their products are moving. The service, to be known as Schwab Asset Intelligence, will also benchmark that movement against the performance of other fund families that Schwab is involved with.

With SalesVision, a report can tell a fund firm not just how many shares of a particular product are held by all Schwab customers - but how many shares of that kind of fund are held by its customers, regardless of fund family.

The holdings in one firm's set of products can be displayed against results for all similar sets.

Plus, the data can be mapped across the entire country. Regions or locales where sales are running above the norm can be highlighted, as can lagging regions or locales.

The Schwab version of this, known as FundMap, will converted into Schwab Asset Intelligence and hosted by Access Data, which will make it more stable and more secure, according to Hanson. Schwab Asset Intelligence will include a Schwab implementation of SalesVision.

This is the first implementation of SalesVision at an "intermediary" or fund distributor such as Schwab, said Dan Cwenar, the president and general manager of Access Data.

What's noteworthy, he says, is that Schwab is funneling in all its data on fund sales throughout the country, so all 600 of the fund sponsors it serves can benefit from the benchmarking that data can produce.

Schwab, he says, "buys into the idea that they want to provide better data and better clarity" to sponsors on how they're doing.

In effect, Schwab will be able to supply "manufacturers" such as a Janus Capital Group with more detailed activity files on different channels of business, from trust business to retail to retirement to advisory. This can include weekly asset and sales reporting, by Morningstar categories of funds. Sales can be isolated down to the zip code. And the biggest trades of the day can also be isolated.

Transactions and asset positions are put in a common format for unified reporting.

Moreover, data will be aggregated and blinded. But what will be visible to any individual fund family is how it is faring against funds as a whole. If it's not a factor in sales of large cap funds, it can fix that. If it's not doing well in California and Nevada, compared to the competition, it can drill in on asset sales and growth rates and see why that it is.

"So you will be able to measure and benchmark your firm's success versus others, in different channels, according to (Morningstar) categories,'' said Hanson.

"I think that level of visibility has not existed before on our platform. I think it will be a big win,'' for investment management firms, he contends.

This kind of "transparency" emanates from user group meetings Schwab held about 18 months ago.

Now, Hanson expects that both the Investment Manager Gateway and the premium set of sales reports can be geared up "in a couple months time.''

Tom Steinert-Threlkeld writes for Securities Technology Monitor.



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