During our new client onboarding process, we stress the client’s need for liquidity access. This can be satisfied with the Schwab checkbook, debit card, via wire transfer, or by MoneyLink. Younger clients in the accumulation phase of their investing career often dismiss the need to access their accounts (“I don’t plan on spending any of this money.”).
On average, we lose 2-3 clients a year. Most of our clients die in captivity and bequeath their assets to their children, who often as not become clients themselves. This means our young clients become old clients and eventually need the liquidity access they shunned early on. It also means we need to repeat our onboarding lectures from time to time in order to assure liquidity, as well as access to all the services required by a contemporary high net worth clientele.
You should all have a Schwab MoneyLink. This tool allows you to move money to and from your primary checking account by making a phone call to P&A. It is particularly useful when you are out of town or immobilized due to health issues. A MoneyLink is offered by Schwab free of charge and is similar to an ACH transfer of funds. P&A doesn’t touch or take title to any of the monies involved in these transactions. No change of ownership occurs in the process because your bank account and Schwab account needs to have the same titling. We recommend you put this tool in place before you need it.
Powers of Attorney….
As people age they like to ensure a succession plan for the management of their affairs. Although we consider the POA an inferior solution when compared to a living trust, it enjoys a high degree of popularity. This no doubt stems from the generosity of the family attorney offering to write a POA while updating wills or during the estate planning process. This legal document allows you to assign another person to represent or act on your behalf in private matters (business and health, for example).
Unfortunately, there are 50 states in the Union plus a handful of territories, and none of these political subdivisions impose uniformity on the manner in which resident attorneys write their POAs. This glitch requires a national vendor such as Schwab, Fidelity, or Vanguard to review each POA presented to them. As a remedy to this time-consuming problem, Schwab provides RIAs with a standardized POA for their client’s use….preapproved if you will. This is very similar to the trading, fee and disbursement authorizations built into their account application which allows us to manage your securities. The POA they are offering you is an accommodation used to triumph over the necessity of reviewing documents written by a local attorney. It is not uncommon for clients to grant multiple POAs; local banks will be much more receptive to local POAs.
If you want to manage the succession of your Schwab account using a power of attorney, we strongly recommend using Schwab’s POA form and, like a MoneyLink, establish it before you need it.