Schwab virtually invented the custodian business for RIAs serving high-net worth individuals. In the late 1990s, about 75% of the all new assets flowing into RIAs poured went to Schwab.
As of June 2003, RIAs custodied $240 billion in assets at Schwab and $71.3 billion at Fidelity. Recently, Schwab reported having $352 billion while Fidelity said it held $132 billion. So Fidelity has over the past two years picked up $61 billion in its RIA business, while Schwab has seen an increase of $112 billion in assets custodied by advisors.
To get a market-appreciation-adjusted figure that indicates how the two big custodians are faring, assume that the typical advisor portfolio held at Schwab and Fidelity consists of 75% stocks and 25% bonds. Since July 1, 2003, a blended portfolio with 75% in stocks as measured by the Russell 3000 and 25% in bonds as measured by the Lehman Bros. Aggregate Bond Index showed a total return of 18.4%. Thus, of the $112 billion increase in advisor assets at Schwab since June 30, 2003, we can assume that about $43 billion came from market appreciation, giving Schwab net new assets of $69 billion. Meanwhile, at Fidelity, of the $61 billion increase in advisor assets, about $13 billion came from market appreciation, giving Fidelity a new asset figure of $48 billion. So Fidelity garnered about 70% of the assets Schwab did in this period.
Fidelity’s share of the RIA market versus Schwab is much bigger now than it was in the late 1990s, and it appears Fidelity’s momentum has held up in recent months.