Shanna Weber, vice president, head of strategy and product development with San Francisco-based Charles Schwab Investment Management Inc. (CSIM) in Denver, can trace her enthusiasm for financial services to a single high-school business course. “I got hooked on business,” Weber says. “I just got really interested in how businesses worked.”
A natural talent for mathematics took Weber to the University of Arizona, where she completed a dual major in finance and management, graduating at the top of her class. A series of positions in the asset-analysis and fund-development sectors followed.
Weber, now head of product development and strategy with CSIM — one of the largest ETF providers in the U.S. — has spent almost two decades in the financial services business. “I’ve never looked back,” she says. “I’m so passionate about product development — because you actually get to solve people’s problems.”
Weber was recruited by CSIM in 2015, after spending several years at the Denver office of Janus Capital Group Inc. She launched a wide array of products during her stint there, including several globally focused investment vehicles. Her initial role at CSIM involved streamlining the firm’s product lineup, which had been pieced together over a number of years as the result of several acquisitions. Her initial assignment, she says, was to enhance the firm’s competitiveness in an investing environment that was rapidly changing. Some of the innovations she oversaw included adjusting the pricing of mutual funds to match that of ETFs.
Weber’s primary focus now is to build on CSIM’s long-standing commitment to improving investors’ access to investment products. Part of that initiative includes a class of commission-free ETFs available through online trades — an option for investors that was first offered by CSIM and has since been copied elsewhere.
“We believe investors shouldn’t have to compromise what they are getting. We don’t want them to make trade-offs between price and quality,” Weber says, referring to the thinking behind the commission-free model. These ETFs allow financial advisors to trade some ETFs online for clients without paying trading commissions that would otherwise eat into clients’ service fees.
The model has been popular, Weber notes: the commission-free group of products now consists of more than 500 ETFs, including products from third-party providers, which cover more than 80 investing categories.
Such innovations are fuelling a global appetite for ETFs. Global inflows for ETFs have reached US$3.3 trillion over the past decade, and that figure is expected to swell to US$12 trillion by 2023. That phenomenal demand has led to intense competition in the sector for new assets, resulting in fee and commission wars that have pushed ETF costs to unprecedented lows. The trend toward lower costs, in turn, is helping to shift the investing conversation from one that has been heavily focused on fees — sometimes to the exclusion of other considerations — to a broader discussion about the investing options that are best for a client’s particular needs and life stage, Weber notes.
“We definitely feel that cost is going to continue to be part of the conversation,” Weber says. “But when we get to the point where we are talking one or two or three basis points, is cost really a differentiator? We encourage investors to think holistically: ‘Cost is definitely important, but how does the product work within your portfolio? What service are you getting from the provider? What types of products are you getting from the provider?'” These types of questions, she says, should be considered as carefully as cost is.
Recent research found that clients get much better at looking at the big picture regarding their portfolios when financial goals are addressed in this broader manner, Weber says. “Investors look for ETFs to meet both their short-term and long-term investment goals,” she says, citing a 2019 client survey conducted by CSIM. “That is the great beauty of an ETF. You can have it as a core holding in your portfolio and you also can use it more tactically during different market environments.”
The survey also found that all investors, particularly millennials, are enthusiastic about ETFs, Weber says: “We found that two-thirds of all investors surveyed actually planned to increase their ETF investments in the next year, and 80% of millennials plan to increase their investments in the next year.”
Perhaps even more indicative of the future of ETFs, 44% of millennials participating in the survey said they would consider placing their entire portfolio, including cash, in ETFs.
Simple familiarity may be driving that interest among younger investors. While older investors originally stocked their portfolios with mutual funds and other traditional investment products, and the latter group of investors had to acclimatize themselves to ETFs as a newer product with distinct technical features, millennials grew up with ETFs, Weber points out. Ten years ago, when millennials as a group began investing in earnest, ETFs in the U.S. already held US$500 billion in assets under management. “It wasn’t like [ETFs] were the new weird thing [for younger investors],” she says. “[This asset class] was just an option.”
Today’s younger investors also are different from older generations in that the former tend to be more conservative when investing, Weber notes, with research over the past decade finding that millennials hold about 70% of their assets in low-risk vehicles and about 30% in equities.
That is a ratio that, Weber says, may require adjustment. “I think it’s the job of advisors and asset managers to really educate people on what risk is and that [clients] need some risk in order to participate [in investment growth],” she says. “So, there has been a lot of effort to try to help all investors understand how a portfolio works.” Indeed, helping clients better understand the range of investment choices by educating advisors has been a priority for CSIM, Weber says. The firm has developed ETF Know-How, a program with tools and resources for advisors.
Weber also is deeply committed to education of another kind: developing the roles of women already in the ETF sector and informing younger women of how they can build careers in a field they may not have considered. Weber is a co-founder of the Denver chapter of Women in ETFs, a global, non-profit organization that promotes participation of women in the ETF sector through education, mentoring and networking. When the organization was established five years ago, Weber says, the vision was to “grow, support and inspire women across the ETF ecosystem. Pretty simple goals.”
Women in ETFs has taken off around the world, including in Canada, and the experience of the Denver chapter illustrates the group’s popularity: the chapter’s first event attracted more than 80 attendees from 42 companies in the local ETF sector. Weber recalls being surprised by the turnout. “I can’t even name 42 companies [in this sector],” she jokes, “and they were all here in Denver.” The Denver group has since grown to 300 members and, Weber says, she knows of women who have landed jobs as a result of the networking opportunities that the group provides.
As is often the case in such initiatives, knowing whether an individual woman’s efforts to move through the ranks are hampered by external forces — such as the biases of others — or by her lack of confidence and vision for herself can be difficult. Weber doubts that outright bias in the workplace is holding women back, but she does think bringing men who hold leadership positions into the conversation is important. They may need help in understanding what is important to women and how those men can support women in their career growth, Weber says. Initiatives such as mentorship programs, flexible work schedules, equal pay, promotion opportunities — and even becoming more aware of biases that men may unknowingly transmit in meetings — help to lower barriers for women.
In addition, Weber says, recruiting women to the financial services field early is essential to addressing the still overwhelming majority of men in senior positions. What is needed, she says, is to build a new “pipeline” that over decades will funnel talented and committed women into positions that provide the potential for entry to the executive suite. That includes connecting with female high-school and college students to dispel their preconceived ideas that women who enter the financial services field face a narrow range of options.
Weber says that the financial services industry in general could do a better job of stripping away myths and its sometimes tarnished image as a closed, elite club with murky ethics. “The [global] financial crisis didn’t help. Bernie Madoff didn’t help,” Weber says. “Historically, people view the financial industry as very conservative, very money-driven; you think of plush corner offices and Wall Street, with mahogany cabinets and expensive suits. But the reality is that’s not what the industry is anymore. And I think of companies that really try to manage costs and expenses, and pass that on to investors and build products that help investors reach their goals, and offer educational opportunities.”
She points out that CSIM, for example, visits high schools to teach students the basics of running their own finances, from opening a bank account to using credit cards responsibly.
“Hopefully, that helps us recruit people from diverse backgrounds,” Weber says, “as well as helping our clients trust us more. That is what we really focus on.”