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Schwab Tech Honcho Skiles Resigns

Dan Skiles, the face of advisor technology to 5,500 RIAs clearing through Schwab Institutional, resigned his post several weeks ago and started a new job today at Shareholders Service Group (SSG).

Why did the affable 38-year-old executive leave Schwab, by far the largest custodian serving independent advisors, for SSG, one of the smallest custodians? Partly, Skiles says, because SSG offered him a partnership stake and partly because SSG reunites him with former colleagues from his pre-Schwab days, but mostly because he wanted to see his two children more.

In March, when Skiles’ seven-year-old son, Luke, set the table for dinner for his wife and six-year-old daughter but set no place at the table for his father, who he assumed was travelling on business, Skiles says he decided his life was out of order.

“SSG is an opportunity to feel challenged and passionate about my work, which I was at Schwab, but also to still make it home for dinner every night,” says Skiles. “My dad went to Vietnam and was away from my brother for an extended period. He didn’t have a choice, but I do.”

Skiles is an expert on practice management and his role at Schwab landed him at the center of crucial advisor technology issues.

As vice president of Schwab Institutional advisor technology solutions, Skiles was responsible for running a department with 10 technology consultants who are stationed all over the country and charged with giving advisors free advice about implementing portfolio management software and other key systems. In addition, Skiles also oversaw Schwab Performance Technologies, a Schwab subsidiary that owns and distributes PortfolioCenter, a leading portfolio reporting software used by 3,400 RIAs.

A San Diego native, Skiles graduated from San Diego State University in 1993 with a bachelor's degree in recreation management and opened a rock climbing gym with several roommates. He worked in that business for only a few months before being introduced to Robert Reed, a senior executive at discount brokerage Jack White & Co., in 1994. At their first meeting, Reed, who was the No. 2 executive at White, asked Skiles to come back later that same day to meet Peter Mangan, who ran White’s mutual fund supermarket and fledgling RIA business. Mangan hired Skiles on the spot. (The rock clmbing business was sold within a couple of years sold but remains a successful company.)

Internet discount brokers like White grew wildly in the mid-1990s and Skiles handled everything from working on the phones with retail clients to manning the trading desk and helping define technology for advisors. In 1998, when TD Waterhouse purchased White, Skiles was tapped to explain the merged firm’s technology solutions to advisors, and he was instrumental in the design and implementation of VEO, a web-based interface for advisors to Waterhouse’s brokerage platform.

In September 2001, I invited Skiles to participate in a panel I was moderating at the FPA Retreat featuring technology chiefs from all three major custodians—Fidelity, Schwab, and Waterhouse. I invited all three executive to lunch, where Skiles met Rich Freyberg, who then headed advisor technology at Schwab. Freyberg told me after that meeting that Skiles was a “Boy Scout” (referring, presumably, to Skiles’ integrity and not his boyish, clean-cut looks). Several months later, Skiles went to work at Schwab Institutional.

Skiles had a tough job at Schwab because the giant brokerage competes with advisors for retail business and makes portfolio accounting software, a critical system in advisor businesses. Many RIAs for years were uneasy about allowing Schwab to provide their core technology system and custody services, a tension that came to a head in 2001 after Schwab announced it would stop selling its CenterPiece PMS system to advisors that did not use Schwab as a custodian. As Skiles rose in Schwab’s ranks and gained influence over decisions about the company's advisor technology, he was able to avoid hitting such hot-button issues, and relations between Schwab and its RIAs have in recent years been less controversial.

Working at SSG reunites Skiles with Reed, an executive VP and chief compliance officer at SSG as well as with Mangan, SSG’s CEO and majority owner. As I wrote in a
recent post, SSG is now a custodian to about 500 RIA firms and it is experiencing a boom amid the economic bust. While the $2 billion amount of assets SSG custodies for RIAs is dwarfed by the big-name custodians—Fidelity, Pershing, Schwab, and TD Ameritrade—SSG has built a profitable business around smaller RIAs that the larger custodians don’t value as much.

According to Mangan, SSG is making inroads with established RIAs with an average of about $30 million of assets under management and who run portfolios of funds, ETFs, and stocks. It’s also gaining traction, he says, with advisors leaving regional and wirehouse brokerages who typically bring no assets initially but garner an average of $15 million in assets from clients within a year of transitioning to SSG. While SSG uses Pershing to clear, and Pershing has its own RIA custody business, Mangan says SSG has differentiated itself by providing diligent service to its advisors and putting together a unique technology platform.

Skiles, who is the 13th employee on the SSG staff, will work on improving internal technology systems used by SSG to service advisors and to help build a technology platform used by its RIA clients. With the broad but undefined title of executive vice president, Skiles' likable personality and natural skills in marketing, communication, and sales as well as his knowledge of advisor technology is likely to help SSG gain a higher profile with advisors even as it is dwarfed by
Fidelity, Pershing, Schwab, TD Ameritrade.

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