Schwab Institutional Helps Pave Path for Financial Advisors Seeking Independence
July 06 2005 - 2:00PM
PR Newswire (US)
Schwab Institutional Helps Pave Path for Financial Advisors Seeking
Independence Webcast and Report Available to Financial Advisors SAN
FRANCISCO, July 6 /PRNewswire-FirstCall/ -- Schwab Institutional, a
leading provider of custodial, operational and trading support for
independent fee-based investment advisors, today announced the
release of a new Schwab Marketing Knowledge Tools (MKT) industry
report that highlights the opportunities available for financial
advisors interested in becoming independent. Schwab Institutional
teamed up with HNW, Inc., with data provided by Moss Adams LLP, to
produce the report examining the business models and compensation
structures available to advisors considering independence, as well
as the reasons why many high-net-worth clients prefer independent
advice. The report, entitled Going Independent: Why Many Successful
Financial Advisors are Starting or Joining Independent Firms,
investigates the benefits and factors influencing advisors
considering the independent model, including: * Desire to have a
more client-focused rather than product-centric practice * Ability
to build equity in and manage a fee-based business * Potential to
keep more of the revenue earned * Reduction of conflicts of
interest * Access to a wider range of products for their clients
The report also closely examines the various independent practice
models and the associated economics of each. The economic analysis
is based on data from 600 independent advisors from the 2004 FPA
Financial Performance Study of Financial Advisory Practices and
other relevant industry reports. Based on the report, the
Registered Independent Advisor (RIA) model can yield the most
income for advisors, as well as provide the most independence, as
compared to the broker and independent broker dealer (IBD) models.
Two of the most important findings contained in the report include:
* The continued embrace of independent advisors by high-net-worth
investors -- Between 2001 and 2004, RIAs have overtaken wirehouses
as the advisors of choice among high-net-worth investors, with
47.5% of high-net-worth households relying on RIAs compared to 30%
in 2001; during that same period wirehouse brokers lost almost 10%
market share, dropping from 40% to 30%(1) * A comparison of the
average advisor compensation for each of the different advisor
models -- For example, for advisors at the $1,000,000 production
level, an RIA would realize $346,000 in total income, whereas a
wirehouse broker would realize $275,000, and an IBD representative
would realize $298,900 "Our goal is to provide advisors considering
independence with the information they need to make an educated
decision," said Michelle Crethar, vice president of Schwab
Institutional. "As high-net-worth investors increasingly turn to
independent advisors for unbiased financial advice, Schwab
Institutional is committed to helping independent advisors with all
aspects of their business, from starting a firm to managing and
growing their business." Advisors interested in learning more about
independence can request a copy of the report by sending an email
to or calling Schwab Institutional at 1-866-855-8819. To help
further educate financial advisors on the opportunities available,
Schwab Institutional's Jon Beatty, senior divisional sales manager,
hosted a webcast on June 1st. The webcast featured Len Costa,
senior vice president and editorial director of HNW, Inc., and
Colin Higgins, president and co-founder of The Golub Group, an
independent investment advisory firm formed by Mr. Higgins and his
partner Michael Golub. Mr. Costa's presentation detailed the growth
of the independent advisor industry, the economics of running an
independent practice and why independent advisors are well
positioned to serve the needs of high-net-worth clients. Mr.
Higgins shared his firsthand experience in forming an independent
advisory firm, including the due diligence and transition process,
as well as the challenges and rewards of running an independent
practice. Schwab Institutional has made the recorded replay of the
webcast available to interested advisors and plans to host more
webcasts in the near future. The webcast replay is available at
http://disclosure.mshow.com/SchwabShow90 . "The webcast was met
with enthusiastic responses from advisors all over the country, who
had dozens of questions on the logistics of starting a new firm,"
said Crethar. "Participants hailed from major wirehouses, banks,
independent broker dealers and regional broker dealers. Combined,
they manage more than three billion dollars." Schwab Institutional
has helped many investment professionals start their own
independent firm or join an existing one through its suite of
comprehensive solutions. Schwab Institutional seeks to help
advisors achieve a smooth transition by providing information about
setting up their business, portfolio management and trading tools,
marketing and business development services, back-office support,
and compliance information from third-party professionals.
Information on turning independent and setting up an independent
advisory firm, is available at
http://www.aboutschwabinstitutional.com/ . About Schwab
Institutional Schwab Institutional, a division of Charles Schwab
& Co. Inc., is a leading provider of custodial, operational and
trading support for independent fee-based investment advisors.
Client assets custodied with Schwab Institutional increased 16
percent to $352 billion between March 31, 2004 and March 31, 2005.
These assets, managed by the approximately 5,000 independent
advisor firms Schwab Institutional serves, represent approximately
one-third of total customer assets custodied with The Charles
Schwab Corporation as of March 31, 2005. About Charles Schwab The
Charles Schwab Corporation (NYSE / Nasdaq: SCH), through its
operating subsidiaries, provides securities brokerage and financial
services to individual investors and the independent investment
advisors who work with them. With over 7 million individual
investor accounts and more than $1 trillion in client assets, The
Charles Schwab Corporation is one of the nation's largest financial
services firms. Its subsidiary Charles Schwab & Co., Inc.
(member SIPC) provides a complete range of investment services and
products, including an extensive selection of mutual funds;
financial planning and investment advice; retirement plans;
referrals to independent fee-based investment advisors; and
custodial, operational and trading support for independent
fee-based investment advisors through its Schwab Institutional
division. Its subsidiary Charles Schwab Bank (member FDIC) provides
banking and mortgage services and products. The corporation's other
operating subsidiaries include U.S. Trust Corporation (member FDIC)
and CyberTrader(R), Inc. (member SIPC). These companies' Web sites
can be reached at http://www.schwab.com/,
http://www.schwabbank.com/, http://www.ustrust.com/, and
http://www.cybertrader.com/. (1) Spectrum, Schwab Business Strategy
Group, Cerulli NFO DATASOURCE: Charles Schwab CONTACT: Lindsay
Tiles of Charles Schwab, +1-415-667-3997, or ; or Tyler Bradford of
Makovsky & Co., +1-212-508-9637, or Web site:
http://www.schwab.com/
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