One of the hot stories in the military personal finance world in 2020 was the transfer of USAA investment assets to two companies, Victory Capital and Charles Schwab. I knew people felt under-informed about this transition, but I didn’t genuinely understand the depth and breadth of their frustration.
So, I have been working with Charles Schwab to help answer some questions, and maybe help you feel a little better about having your investments with Schwab. (Note: All of my investments were transferred to Victory Capital, so I have no personal experience with Schwab. But my advisor friends are unanimous in their praise of Schwab, both as a company and specifically for the ease of their customer interface.)
Full disclosure: I have received compensation from Schwab for work done with them. This isn’t a sponsored post in the traditional sense, but money has been exchanged in my relationship with Schwab. I also have a long friendship with USAA. I’ve hung out at their headquarters, eaten their breakfast burritos, attended their conferences, and they have sponsored many events of which I have been a part.
In order to get a better sense of the transition from the “inside,” I had a conversation with Danielle Munoz, Schwab Vice President of Virtual Member Branch. The Virtual Member Branch is the division of Schwab that serves USAA members who have transitioned to Schwab for wealth management services. Danielle came to Schwab from USAA, where she served veteran and military families for over 25 years.
Why Did USAA Sell Their Investment Businesses?
For many USAA members, the biggest question is, “Why?” Why, after years of faithfully providing investment management services for members, did USAA decide to divest itself of the investment branch of the business?
“It probably won’t surprise any of your readers that trust has always been USAA’s “secret” ingredient. They have a long history of acting in their members’ best interests. They take great pride in serving the military and veteran community.
Their mission drives them to facilitate their members’ financial security, just like our mission at Schwab drives us to look at investing through client’s eyes and act in their best interest. So, when they looked at the investment product landscape and saw the competition, regulatory demands, industry consolidation, and increasing expectations for low-to-no fee products, they came to the conclusion that forming a strategic relationship with a trusted financial services firm would be the right way for them to honor their mission to best serve their members.”
This makes perfect sense. One of the most important parts of being a financial educator, coach, or advisor is knowing when you aren’t the right person to handle a particular part of a job, and helping your client find that right person. So just like I might hand you off to a tax professional for specific tax advice, USAA saw that their members would be best served by finding the right organization to handle their investment needs.
This also makes sense based on many conversations that I’ve had with USAA leadership over the years. I’ve been one of the people at those conferences who has ALL.THE.QUESTIONS., and not necessarily easy questions. I’ve picked at USAA’s investment costs, and shared frustrations about the advising process. Sometimes, I’ve wondered why they kept inviting me back. One consistent theme was, “There’s room for improvement.” This move IS that improvement.
Two Different Companies
As I’ve mentioned before, my particular investments weren’t moved to Schwab. This confused me for longer than I care to admit. As often happens, my friend Doug Nordman explained it in a super-simple way that helped me figure it out.
USAA had two investment businesses: the Asset Management Company and the Investment Management Company.
The Asset Management Company included USAA’s mutual funds, exchange traded funds, and 529 accounts.
The Investment Management Company included USAA’s brokerage and managed portfolio accounts. These include services that are often called “wealth management.”
The Asset Management Company was transferred to Victory Capital.
The Investment Management Company was transferred to Schwab.
Because all of my investments were in USAA mutual funds, my investments went to Victory Capital. Folks with brokerage accounts and managed portfolios went to Schwab. Some people had some accounts go to Victory Capital and other accounts go to Schwab.
What Does This Mean For You?
I know many people have learned about this transfer, and feel somewhat stuck. Particularly if you’ve been a passive investor, like me, having to learn a whole new system can seem overwhelming. It really isn’t, I promise!
If you have done nothing at all, the first step is to reach out to Schwab. You can begin that process by going to schwab.com or by calling 1-800-435-4000. And you don’t need to wait for typical business hours. Danielle shared, “We know that service members need flexibility because they cover a wide range of daily schedules and time zones along with being PCS’d and Deploying. That’s a big part of why we focus on digital resources that are available on-demand, along with providing 24/7/365 support from representatives that are recognized for their service.” That’s super-helpful when you’re calling from Australia or working a non-traditional work schedule.
It’s A Good Thing! Really!
I’ll be the first person to tell you that this transition hasn’t been seamless But if you are with Charles Schwab, I encourage you .to look at this move as a positive opportunity to do more with your investment portfolio. There are benefits to the set-it-and-forget-it approach to investing, but you do need to look at your investments once in a while. And this is a great time to do it.
Plus, Schwab offers things you couldn’t get when you were with USAA. I asked Danielle about this.
“We do provide clients a broader range of offerings than was available to them before this transition. This really reflects a modern, full-service approach to build and manage investments, along with products and services with among the lowest costs in the industry and $0 online trade commissions for U.S. and Canadian stocks, ETFs, and options trades.
Every client’s needs are different, and we’re committed to meeting each of them where they are on their financial journey. Whether it’s learning more about finance in general for someone just starting out in their military career, separating from the military or a veteran looking at their options for retirement, we’re excited to be in this excellent position to serve USAA members and all members of the military and veteran community.”
Schwab has vastly more experience and resources than USAA’s investment businesses did, and I believe that will show in the performance and service that you will receive from Schwab. I know it is hard to think of USAA as being small, but their investment companies were tiny in the greater scheme of the world of investing. Once again back to Doug, who lays out exactly how tiny, and why that was a less-than-great thing for folks who were invested with USAA.
Many of us have a long-standing affinity for products with the USAA name, and it can be hard to get your head around the idea of that change. But you need to move past that and be thrilled with this outcome. Lower costs and a long history of outstanding customer service make Schwab a clear win for the USAA customers who were moved there.
A Few More Things About The Move To Schwab
Danielle shared a few more thoughts that I didn’t fit elsewhere in this article, but that I think are important to include.
“I’ve been in the unique position of being on both sides of this relationship, having served USAA members as a leader there for 25 years. I’ve learned some important things being part of two storied companies (not to mention a military family!) that place a very high value on trust. Trust isn’t something you can just talk about. Trust is earned through actions.
I love that we at Schwab have a track record of supporting the military and veteran community. This can be seen in actions like our partnering with initiatives like Hiring Our Heroes and how we consistently highlight our military and veteran employees. We’re also always finding new ways to get involved, like the first-ever Schwab Military Pro Bono Challenge that supported 6 different military/veteran non-profits in 2020. I believe it’s things like this, combined with our dedication to seeing the world from the perspective of our clients’ needs and acting accordingly, that made us the logical choice for USAA to form that strategic relationship with.”
She also said, “Whether military or not, Schwab’s clients see our mission reflected in how they are treated and in how they are supported at a practical level. We’ve had the good fortune to be recognized for this recently as Schwab was named Most Trusted Online Broker for 2020 by Investor’s Business Daily. We’ve found over and over again that when we invest in taking care of our clients, they reward us with their business.”
I have been talking to some great folks at Schwab for months now, and I have been nothing but impressed by their professionalism and authentic enthusiasm for serving the military community. There is a little part of me that wishes that I had moved my personal investments to Schwab, and I still may do that.
Still have questions about the move from USAA investments to Schwab? Ask me! If I don’t know the answer, I bet I know someone who does.
This article is sponsored by Charles Schwab. The comments, views, and opinions expressed in the article are those of the author. The content presented here is intended for informational purposes only. The information is not intended to provide tax, legal, or investment advice; please check with your financial representative for how it applies to your specific situation.