Commoditization is here in asset management, and it's coming for roboadvisors next. So says Walt Bettinger.

Walt Bettinger Charles Schwab President & CEO

In a year-end interview with Aparna Narayanan of Investor's Business Daily, the Charles Schwab [profile] CEO says, in the investing world, "the two major trends are commoditization and transparency."

Commoditization already hit discount brokers, Bettinger notes, and now passive investing is bringing the commoditization pain to asset management. Yet he says the same trend is now "underway in asset allocation and is beginning in financial and investment planning." In other words, roboadvisors and human advisors beware!

To deal with commoditization and transparency trends, Bettinger says, Schwab offers its own ETFs and target date funds (both of which Bettinger pitches as very low-cost) and its own roboadvisor service (both standalone and advisor-friendly).

Bettinger also hints, briefly, at his 2017 brokerage and mutual fund business plans for Schwab. And he reminds IBD that Schwab "played a major role in lowering commissions years ago."

"More of the same, but with even greater intensity," Bettinger tells IBD to expect. "Our strategy will continue to modernize and disrupt the industry on behalf of the investor by harnessing in our scale to lower costs and expand access to wealth management services that historically have only been available and affordable to the most affluent."

So, that commoditization and transparency that Bettinger warns you about is actually what Schwab as a firm is trying to encourage. 

Edited by: Neil Anderson, Managing Editor


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