Schwab Advisor Services, which as the leading RIA custodian epitomizes the independent advisor, is making inroads capturing the assets of the least independent among the advisor community, going after the huddled masses of wirehouse advisors — at least the most entrepreneurial among them — who are yearning to breathe free.
That the advisory division of Charles Schwab & Co. Inc. is making a splash in this competitive playing field is indicated by new data, which Schwab Advisor Services senior managing director Tim Oden calls “hot off the press.”
In an interview with ThinkAdvisor at the firm’s annual Schwab Impact 2014 conference in Denver, Oden deadpanned the seemingly grim news that the number of new teams recruited year to year from 2013 to the most recent reporting period in 2014 fell 17%.
But then he ginned up the contrasting finding that net new advised assets are up 19%.
Mathematically, that can only mean that “average deal size has gone sky-high,” he says ebulliently. Indeed, he further interprets the anomalous-sounding numbers by noting that practices with $35 million in assets under management are down significantly, while the average size of advised assets has increased 31% to a new peak of $144 million.
And the clincher: year to date, the proportion of net new assets coming from wirehouses is more than double the previous year’s pace.
So how did Schwab break through to the hard-to-get wirehouse crowd?
Oden, who acknowledges that wirehouse advisors are his top recruitment target (because they control the most assets) says that key strategic investments the firm has made in recent years today give Schwab the ability to attract advisors who six or seven years ago would have passed for lack of certain “sophisticated solutions.”
For example, the existence of Schwab Bank enables advisors to collateralize portfolios through loan facilities such that wirehouse advisors whose clients enjoy loans or lines of credit can replace them once the client accounts are transferred.
But far beyond these credit resources are “consultative resources” that most animated Oden. The consultant will use Schwab’s RIA Benchmarking Study to find that advisor’s relevant cohort and thereby develop goals that are realistically achievable in his practice.
Whether the advisor is itching to accelerate his business growth or to take his service model up a notch, Schwab’s consultants are there to help —“even before he’s a client,” Oden says.
“Long before you bring a single dollar to us,” he continues, Schwab consultant will sit down with a wirehouse advisor who, say, wants to build a digital presence.