Advisors have multiple options when it comes to their custodian, or as is often the case, custodians, of choice. For smaller RIA firms it may seem like their options are limited, since the larger, more sophisticated custodians might be out of reach until those firms can accumulate more assets to meet those larger custodians’ AUM minimums.
But Jalina Kerr of Schwab Advisor Services begs to differ on that point when it comes to smaller firms using Schwab as their custodian.
Kerr, senior VP of Integrated Solutions & Core Custody Services at Charles Schwab, said her team “focuses on CX,” the advisor customer experience, when it comes to these smaller firms. The team’s priority is on smartly using technology to deliver services to those firms, including guidance on how the firms can adopt technology solutions to deliver more scale and efficiency to their operations and how best to work with Core Custody’s service team through what it calls its Center of Excellence.
While in an interview with ThinkAdvisor, Kerr declined to say how many of Schwab Advisor Services’ 7,500-plus RIAs are in that smaller cohort of less than $100 million in AUM, she did say that 200 attended Schwab’s annual Impact conference in Washington last month, and that 500 firms attended a recent Schwab videoconference that focused on cybersecurity.
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“These firms,” Kerr said, “are very concerned” about that topic, partly because they tend to be more digital in their operations and less paper-based than larger firms. Schwab’s web-based and video support resources are particularly appealing to these smaller firms, since they can’t always afford to travel to in-person workshops or conferences as much as larger firms, she said.
Why would Schwab focus on these smaller firms, and devote 70 “seasoned” staffers to specifically serve them? “The base is profitable,” Kerr said, and yields more revenue as a percentage of client assets under management than larger firms.
These firms are also growing slightly faster than even the largest firms, Schwab’s 2018 RIA benchmarking data shows, with an 11.7% five-year CAGR in AUM. The largest RIAs in the 2018 benchmarking study—with more than $1 billion in AUM—grew at an 11.6% rate from 2013-2017.