Where Schwab beats Fidelity

More than half of the $75 billion Charles Schwab & Co took in last year came from independent financial advisors reports Financial Advisor Magazine.

The unit provides custodial, trading and support services to independent advisors. These advisors, who sell advice rather than products, house their clients' assets at Schwab, a licensed broker-dealer, and execute their trades through Schwab. Schwab also provides much of the advisors' administrative support.

Schwab Institutional is growing faster than Schwab's two other main businesses: Schwab Investor Services, the company's retail brokerage business, and US Trust, a wealth management firm serving individual and institutional clients.
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The increase in independents reflects advisors who have left large firms or migrated to the advisory business from other industries, Gallant said.

There are several reasons advisors choose to strike out on their own: the opportunity to be their own boss, earn more and create a business they can sell or pass onto their
children. Some advisors were also forced out on their own following layoffs at large firms.

Schwab Institutional's market share in late 2004 was almost 23%, compared with 8% for Fidelity Investments, its next closest competitor, Schwab said, citing data from Cerulli.