How to initiate a transfer or purchase for Schwab Alternative Investment Custody Services

How to initiate a transfer or purchase for Schwab Alternative Investment Custody Services

Schwab's Alternative Investment Custody Services allows you to custody compatible alternative investments Tooltip at Schwab and manage these investments alongside the rest of your traditional assets. Alternative Investment Custody Services offers the benefits of the Alternative Investment Products (AIP) platform, which improves alternative investment asset access, valuation, and transparency.

To initiate a transfer or purchase for Alternative Investment Custody Services, you can use DocuSign® and paper forms.

To initiate a transfer or purchase for Alternative Investment Custody Services, review the types of investments accepted by Schwab, and then see the Asset Acceptance Review information for estimated review time frames.

For transfers into Schwab
  • A completed Transfer Your Account to Schwab form
  • Issuer or contra firm statement to confirm the position
  • For pooled offshore funds, the issuer must have a “no lien certification” establishing the administrator as a control location for the investment (we will request this from the fund administrator during the asset review)
  • For private equities, a physical stock certificate registered to Schwab in nominee name Tooltip
For purchases and subsequent purchases through Schwab
  • A completed Alternative Investment Letter of Authorization form
  • A subscription document or investor qualification document
  • For capital calls, see capital call instructions
If using DocuSign
  • For existing Schwab clients, a complete Schwab Advisor Center® profile with the account holder’s current email address, and mobile phone number
  • For new-to-Schwab clients, the email address and a mobile phone number
  • All clients must use either Alliance Authentication (only available when starting the envelope within Schwab Advisor Center), or, both text message (SMS) authentication and Knowledge Based Authentication (KBA) for DocuSign (available in both Schwab Advisor Center and the DocuSign Console)

Confirm the asset is accepted for custody. If not, follow the Asset Acceptance Review process for each alternative investment asset your firm would like Schwab to consider holding in the client account.

Purchases
  1. Once the assets are eligible for custody through the Asset Acceptance Review, the Alternative Investment Letter of Authorization for each transaction must be completed. Your client must also provide the fund's subscription documents.
  2. In the Forms library on Schwab Advisor Center®, select the Alternative Investment Letter of Authorization form.
Transfers
  1. Your client must submit a completed Transfer Your Account to Schwab form, and a statement dated within 90 days.

    Note: The AI LOA is no longer needed for transfers.

If using DocuSign: See How to use DocuSign.

Confirm the asset is accepted for custody. If not, follow the Asset Acceptance Review process for each alternative investment asset your firm would like Schwab to consider holding in the client account.

Purchase
  • Once the assets are eligible for custody, an LOA for each must be completed. Your client must also provide the fund's subscription documents.
  • In the Forms library on Schwab Advisor Center, select the Alternative Investment Letter of Authorization form. Click Select, and select Open PDF.
Transfer
  1. Once the assets are eligible for custody, complete a Transfer of Account (TOA) form and a contra statement dated within 90 days.
  2. Complete all necessary fields and save the form as a PDF document to your desktop.

Print the form and obtain signatures from all account holders. Send the signed form to your Schwab service team via a Schwab Advisor Center service request.

  • Alternative investment purchases normally process within 48 business hours once all completed documents are received in good order.
  • Review the Asset Acceptance Review information for estimated review time frames. Schwab may request additional service information Tooltip to gather extra issuer forms needed to complete the request.
  • Schwab will charge your client an annual fee to maintain the position.
  • If you have questions about transferring or purchasing assets to a Schwab account, call your service team.
  • If forms were submitted using DocuSign, see the What's next? section of How to use DocuSign.

To select a form, go to the Forms library on Schwab Advisor Center. 

Form: Alternative Investment Asset Review Request FormForm: Alternative Investment Letter of Authorization

What happens if Schwab receives an incoming transfer that includes alternative investment assets?
We strongly recommend advisors submit their alternative investment assets for review prior to attempting to transfer a client’s assets, to avoid a rejection of the asset.

The transfer will process as normal with the following review of alternative investments:

  • Securities already reviewed and declined, or are structurally incompatible with Schwab policy, remain with the contra firm.
  • The AS Alternative Investment Team works with you to review any unknown securities that might meet our custody criteria.

Why does Schwab offer pending settlement placeholders Tooltip on purchases through Schwab Alternative Investment OneSource® but not on purchases through Alternative Investment Custody Services?
Schwab does not treat a purchase on the Alternative Investment Custody Services platform as a trade and therefore cannot offer pending settlement placeholders. For Alternative Investment Custody Services purchases, Schwab does not execute trades as broker of record, and confirmations come directly from the fund.

In comparison, for purchases on the Schwab Alternative Investment OneSource platform, Schwab executes trades as broker of record. Confirmations will come from Schwab.

How long does it take to transfer an alternative investment asset position from a contra custodian to Schwab?
After the alternative investment asset is accepted for custody and the transfer is initiated, a transfer could take as long as six to eight weeks, depending on the issuer and/or the contra custodian.

What are the fees associated with the Asset Acceptance Review?
Schwab does not charge a fee to review an alternative investment asset.

After an alternative investment asset purchase, how long will it take before the position is posted to the account?
When a client purchases an alternative security on our custody platform, there is a short period of time or “gap” between the funding date and receipt of the final purchase confirmation required for Schwab to post the security to the client account. During this period, the asset purchased does not appear in the client’s Schwab account, and the value of the client’s Schwab account reflects a temporary decrease by the amount of the purchase. This is referred to as an “asset gap.” The account value is naturally corrected once the purchase confirmation is received and processed. This could take several days or weeks, depending on the fund.

Is there a limit to the amount of alternative investment assets that can be held in an account at Schwab?
Yes. An advisor cannot hold more than a 40% concentration of alternative investment assets as part of his/her total account assets at Schwab, not including Schwab Alternative Investment OneSource.

Does Schwab report alternative investment asset positions on client statements?
Yes. Schwab reports alternative investment asset positions held in custody at Schwab.

How to subscribe to an investment available on Schwab Alternative Investment OneSource™
How to transfer assets to a Schwab account
How to use DocuSign®
Introduction to Schwab Alternative Investment Custody Services

Investing in alternative investments is speculative, not suitable for all clients, and generally intended for experienced and sophisticated investors who are willing and able to bear the high economic risks of the investment. Investors should obtain and carefully read the related offering memorandum, which will contain the information needed to help evaluate the potential investment and provide important disclosures regarding risks, fees, and expenses.

Schwab Alternative Investment OneSource® does not provide investment advisors or their clients advice about potential investment in participating funds. It is each investment advisor's responsibility to determine the suitability of such an investment for his or her clients. Alternative investments such as the participating funds are risky, and an advisor's clients may lose their entire investment in a fund.

Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. An investment in any offering made available through any third-party platform is speculative and involves a high degree of risk. Investors may lose all or a substantial portion of their investment. Alternative investment often employ leverage and other speculative practices that increase an investor’s risk of loss, often charge high fees, may require investors to satisfy capital calls, and can be highly illiquid and volatile. These investments may lack diversification, involve complex tax structures and have delays in reporting.

Risks of REITs are similar to those associated with direct ownership of real estate, such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer.

Investing in REITs may pose additional risks such as real estate industry risk, interest rate risk, and liquidity risk.

Schwab receives remuneration from fund companies participating in the Schwab Alternative Investment OneSource™ platform for recordkeeping, shareholder services, and other administrative services.

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