Schwab wraps growth services around custody to lure breakaway RIAs

Schwab has announced a new fee-based program to provide operations, technology, and growth support to financial advisors who want to transition to the independent registered investment advisor (RIA) model. The new Schwab Advisor ProDirect program will be exclusively available to advisors who also use Schwab’s RIA custody platform.

Advisor ProDirect is designed for smaller advisors with $50 million to $300 million in client assets. Members of the program will largely be advisors who are breaking away from wirehouses or broker-dealers to run their own business as independents with their own ADV forms. Advisor ProDirect will launch in July, Schwab announced in a media call on May 20.

The program will bill members $5,250 per quarter ($21,000 annually) with a one-year initial membership that is renewable quarterly thereafter. Advisor ProDirect will be an optional complementary add-on to Schwab Advisor Services (SAS), whose RIA custody division has roughly $4.3 trillion in assets under management as the industry’s largest RIA custodian.

“There are many advisors that leave those wirehouses and other captive models at $50, $100, $200 million [AUM], and they have every intention of being the next billion dollar advisor out there,” said Brad Losson, head of enterprise solutions at SAS. “We want to help accelerate that. We want to help secure that future for those individuals who want to realize that future.”

Schwab currently serves almost 11,000 advisors with under $100 million in assets on its RIA custody platform. To further the firm’s appeal to smaller independent advisors, Advisor ProDirect will offer growth consultants, a community to connect with other advisors, educational training for optimizing Schwab’s advisor ecosystem, as well as “curated third party provider relationships and discounts,” said Shawnette Gauer, managing Director of enterprise solutions at SAS.

Gauer envisions Advisor Pro Direct to be an “evergreen” program for advisors on a “multi-year journey” within the program. Schwab’s new program targeting breakaway independent RIAs comes after RIA custodian competitor Fidelity debuted new tech services last year for smaller RIAs.

“There's a ton of mergers and acquisitions, consolidation in the top end of the marketplace, but there's huge forest regeneration on the lower end of the market, and we want to help accelerate that,” said Losson. “We want to create not just a path, but a super highway to independence, and Advisor Pro Direct is really meant to help facilitate that.”