In its most recent quarterly earnings release, Charles Schwab reported it held $1.1 trillion in RIA assets at Schwab Advisor Services (SAS). But at its 25th annual Impact conference in Boston in mid-November, the head of SAS, Bernie Clark, encouraged RIAs to think even bigger, saying Schwab was committed to helping advisors gather more of the estimated $23 trillion in affluent client assets that live outside the RIA channel (affluent defined here as client accounts with $500,000 or more in investable assets).
However, Clark warned the 4,500 attendees at Impact that the RIA channel's growth was not going unnoticed. "People are chasing you," he said in the opening general session. "They want to have what you have," not least the strong relationships with clients that "are at the heart of your business models." Moreover, he said that for RIAs, "complacency is your biggest enemy."
Clark estimated that assets in the overall RIA channel totaled $4 trillion, held by 14,000 RIA firms with 32,000 employees. Clark argued that attracting, training and "retaining talent will be critical to your future success." He then outlined the ways that Schwab is helping RIAs meet the human capital challenge, including its existing Executive Leadership and intern programs; RIA Talent Advantage, a program designed to help advisors build a more diverse workforce; and a new initiative it is working on with Deena Katz at Texas Tech University for high school students.
He suggested that to succeed, advisors must meet the needs of multiple generations of clients: boomers and Gen X and Gen Y clients, but also those young people who constitute the generation following the millennials. "Generation Z will be different as well," Clark said, envisioning a near future where advisors will be "running multiple businesses within your firm" to meet those differing generations' different needs.
"The digital era will bring opportunities and many threats" to advisors, Clark continued, arguing that social media now constitutes "your largest center of influence." He also said that "we must stay together on advocacy — inside and outside Washington" and trumpeted a change to Schwab's digital, print and television ads to highlight potential clients' option of connecting with an independent advisor.
Clark invited onto the stage Schwab CEO Walt Bettinger, who spoke of Schwab corporate's continued gains in market share and asset growth. This is "the fourth straight year," Bettinger said, that "we've brought in more than $100 billion in net new assets." Referring to its RIA referral offering, Schwab Advisor Network, he said "we're at nearly $6 billion in closed business in the first nine months" alone of 2015.
Bettinger addressed the robo-advisor issue, calling it "overhyped" but noting that "aspects of those platforms make incredible sense for many clients." In its own advisor survey, "last year, 50% of you saw a role for digital advice in your business," while this year "it's now 70%."
In its Q3 results, the company said its retail and advisor Intelligent Portfolios platform has attracted $4.1 billion in client assets already this year. Schwab launched the retail version of its all-ETF digital advice platform in March 2015. The RIA version, Schwab Institutional Intelligent Portfolios, was launched in June 2015.
