We put all our plans (almost all) on investment platforms like ING,A Funds etc
for ease of admin for us and what we feel is sponsor protection re investment choices
Q;sponsor wants to leave HIS monies at Schwab.
Is that kosher or what is a solution?

Would the NHCEs be given the same choice? I.e., to leave their money at Schwab too?

yes they would

Then its kosher. As long as all participants have the option to select the investment you can do it. This means you have to allow new participants to select investments.