REUTERS SUMMIT-Few clients seek Schwab 'accountability' rebate

(Adds dollar amount of rebate in third paragraph)

By Jed Horowitz

New York, June 23 (Reuters) - The "accountability guarantee" that Charles Schwab Corp unveiled with fanfare in December has to date cost the San Francisco-based financial company pocket money only.

In a press tour and national ad campaign featuring the caring sincerity of its eponymous founder, Schwab promised to refund the previous quarter's advisory fee to any customer in certain fee-based accounts who complains about service or other issues.

So far, Schwab has paid about $500,000 to 400 clients out of about 340,000 account holders who are eligible for the rebate, Schwab executive vice president and co-head of retail brokerage John Clendening said at Reuters Wealth Management Summit last week. A spokeswoman said the clients receiving rebates subsequently transferred about $3 million of new money to the firm.

Company officials say the campaign aims to build investor confidence in its brand as distrust of large banks and bank-owned brokerage firms among consumers remains high five years after the U.S. financial crisis.

" e'll refund your program fee from the previous quarter and work with you to make things right," says a webpage for the guarantee featuring a photo of a bespectacled Chuck Schwab looking determinedly into the distance. "You won't find that kind of accountability everywhere - but you will find it here." (Link to Schwab accountability guarantee: http://bit.ly/1nkiA3v )

The campaign also underscores Schwab's attempt to change its image from a low-commission discount broker to one that also offers guidance and advisory accounts to wealthier clients. The guarantee applies to five of the company's in-house fee-based investment and advice programs. Like full-service competitors such as Morgan Stanley and Bank of America (TLO: BAC.TI - news) 's Merrill Lynch Global Wealth Management, Schwab prefers fee-based accounts because they provide more stable income than commissions that rise and fall with investors' engagement in the markets.

Clendening said only 17 percent of assets from clients who work through Schwab's approximately 300 branches are in fee-based accounts, giving it room to grow. About 25 to 40 percent of client assets at full-service firms are in advisory programs.

Schwab is not featuring the guarantee in its new ad campaign launched two weeks ago but will market it "on and off" and continue highlighting it on websites and other client-facing material. Complaints induced by the guarantee help Schwab avoid the loss of new money from disgruntled but silent customers who want to avoid the awkwardness of firing their broker, he said.

"We want all of our clients to know that the guarantee is there," Clendening said. "We are not hoping ... that redemptions are minimal, which is the approach in other industries."

A company spokeswoman wrote in an email that "the guarantee almost always results in retention, and in some instances the guarantee was the primary reason the client remained enrolled."

Thomas Bradley, president of retail distribution at TD Ameritrade Holdings, a discount brokerage competitor that also is trying to gather more fee-based assets, said at the Reuters Summit that the firm does not see a need for a formal rebate program. "If someone has an issue, with a rate or a commission or whatever ... we will do whatever we can to satisfy that client," he said. (Reporting by Jed Horowitz; Editing by Meredith Mazzilli)