How Interactive Brokers Is Fighting for Advisor Talent

Another factor is the plethora of choice facing any given advisor or team considering a move in 2025. From wirehouses to middle-market RIAs to the newest upstart firms, everyone is competing for a finite amount of talent.

“It’s very important for firms to be aware of these trends,” Sanders said. “If you’re not competing effectively against the competition out there for advisors, you’re not going to stay in business.”

Here are highlights from our conversation, edited for length and clarity:

THINKADVISOR: Can you tell us about your background in the industry and your more than two-decade experience helping to build and run Interactive Brokers? You were with Citibank previously, right?

STEVE SANDERS: Yes that’s right. I spent 15 years at Citibank, and it was a fantastic experience at that time. I actually met my wife there, believe it or not, and I learned lots of different things about the wealth management industry — everything from consumer banking to trading and the structuring of deals.

After my time at the bank, I had intentions to start an options exchange. Unfortunately, this was right around the time that the internet bubble burst, and I only ended up raising about 80% of the funds we would have needed.

Obviously, that was hard at the time, because my wife and I had three young daughters to take care of. In the end I think it was fortuitous, because I’ve now been here for almost 24 years. It’s an interesting story, because Thomas Peterffy [Interactive Brokers’ founder and longtime CEO] was initially going to be one of my investors at the options exchange, which is where my connection to this firm first started.

He brought me on to help set up a custodian for advisors, since I had the industry knowledge as well as computer programming skills. It’s been quite a ride since, and I continue to enjoy working in this space and serving advisors.

What were the quality-of-life issues facing advisors then, and how have they evolved since? Has the competition for talent always been so fierce?

Well, let me fast forward a little bit to the 2007 or 2008 period — the financial crisis — because it did take us some time to start to get some traction and recognition in the industry.

As you might recall, the financial crisis dealt a big blow to many custodians, so much so that they were concerned about their capital and their operating costs, and they actually started to essentially kick advisor-clients off of their platforms. They did this by either raising their fees significantly or establishing some quite high asset minimums.

We were positioned differently because of our early embrace of automation and self-service, particularly for middle-asset and especially lower-asset advisors. We were in a good position to help these advisors who were being driven off of their previous platforms, so it really turned into a good business for us and we were able to grow substantially.

It’s an early story of how technology has influenced this space. It was pretty remarkable to see how advisors quickly got used to more of a self-service, technology-based operating model, versus the traditional approach of the big custodians who had to employ tons of people and resources merely to support their advisors as they oversaw the routine management of their books of business.

When you speak with advisors who are seeking out an RIA custodian or service provider, what are the most common pain points that inspire them to repaper?

It’s pretty much what you would expect, to be frank. They have the sense that they are getting ripped off relative to the fees they pay, or they are seriously dissatisfied by the services they receive from their current provider, and they look out into the marketplace and see that they have other options.

Something specific I hear about frequently is that advisors who are leading these impressive teams that used to get a lot of respect and attention from the home office leadership all of a sudden feel like they can’t get their phone calls answered or the problems that arise in their business addressed in an effective manner. If you used to feel like you mattered and you could get the help you needed without a lot of hassle, and that goes away, it’s frustrating.

It matters even more today because advisors want to be able to provide the latest and greatest services so that they can compete for wealthy clients with more sophisticated needs across all the aspects of wealth management, insurance, retirement planning, etc.

Do you worry much about the ways the wealth management industry is perceived by young people or career changers? The number of advisors has held pretty steadily, or even declined, over the past decade, despite the rapid growth in demand for advice. Will firms be able to get the people they need to continue growing?

It’s an interesting observation and question.

It reminds me of the last time I went to my doctor, and we were having a conversation about the fact that he’s seeing a lot of older, highly experienced doctors retire and not be replaced easily. That’s a real challenge, and I think the same pressures are being applied in the advisor industry today.

I believe young people will find their way into this industry, however, just given the fantastic career paths and the opportunity to build your own wealth. But what is clear to me is that people don’t really want to be that sole practitioner anymore and just dedicate all their energy and waking hours to establishing the business. I mean, being an advisor at any firm is hard work, but doing it all on your own has really become a challenge.

The expectation is that team-based approaches and technology can help people entering the industry maintain that work-life balance that seems to be even more important to the younger generations who will need to replace the older, retiring advisors. We’ll have to see.

Something else interesting to point out is that we actually have a lot of our advisors on our platform who are coming to us from international markets, especially in Europe and Asia. That’s a source of highly motivated and educated talent that could help ease some of the concerns your talking about, I hope. The bottom line is that I would certainly recommend this profession to anyone who wants to have a meaningful career and work hard of behalf of themselves and their clients.

With all these trends and issues in mind, how are you charting a long-term path forward for Interactive Brokers?

I would start by observing that Interactive Brokers, at year-end 2024, had 1,062 RIA accounts with $64 billion in equity — a 51% year-over-year increase in RIA assets. I think that shows we’re doing something right.

Our strategy is pretty straightforward. We’re working to perfect our technology while keeping our fees low and solving the problems that advisors tell us they have. And, we’re offering up what I believe is the best access to investment opportunities here in the U.S. and around the world.

Whether its about investments or technology, getting it right is about listening to the clients. If they tell us they really need something, we’re going to focus on that — whether its clearing and custody needs or options trading or establishing universal accounts that let advisors who are international to easily steward investments in U.S. dollars.

Probably the most exciting recent development is our launch of a new trading platform that supports our advisors who are those real investment specialists. We’ve migrated all our tools and capabilities into a new web-based portal that is simpler and easier to use. So, even as we see financial planning becoming the center of the advisor-client relationship, we’re still developing tools and services that can help investment-focused advisors continue to stand out.

Pictured: Steve Sanders