Advisors looking to better understand the hybrid practice model that combines traditional brokerage and fee-based advisory businesses can now reference a Charles Schwab Advisor Services white paper, released Thursday, that outlines what advisors need to know.
Schwab’s white paper, “Understanding the Hybrid Practice – Considerations for Advisors in Transition,” comes at a time when a growing number of advisors are moving to the registered investment advisor (RIA) model from the independent broker-dealer (IBD) space.
“An increasing number of advisors transitioning to independence are selecting a hybrid practice model for their business,” said Nick Georgis (left), Schwab Advisor Services vice president, in a statement. “In fact, more than half of the advisors that went independent with Schwab in 2009 and 2010 established a hybrid practice model, primarily for the flexibility to offer a broader set of products and services to clients while maintaining multiple sources of revenue. And we see this trend gaining momentum with the number of transitioning advisors choosing the hybrid model increasing about 10% year over year.”
Specifically, the report focuses on trends driving growth in the hybrid market, strategic considerations in choosing a hybrid practice model and the economics of being a hybrid advisor. The report also outlines two different hybrid practice models and how these two models affect a firm’s services for clients.
These include the “semi-captive” hybrid model, in which an advisor joins a corporate RIA of an independent broker-dealer and the “dually registered” hybrid model, in which an advisor starts or joins an independent RIA firm.
San Franciso-based Charles Schwab provides custodial, operational and trading support for approximately 6,000 independent RIAs. In 2010, Schwab Advisor Services saw 163 advisory teams transition to independence, representing $12.6 billion in assets under management. A growing number of advisors in transition to the fully independent RIA