Five takeaways for RIAs from my discussion with Schwab CEO Walt Bettinger

Article

July 8, 2021

By Bernie Clark, head of Schwab Advisor Services

As I reflect on a recent sit-down I had with our CEO, Walt Bettinger, at the annual Schwab Advisor Services’ EXPLORE conference, I can’t help but think about what an incredible amount of change we have seen in the independent advice space since Walt first joined us at  EXPLORE 15 years ago.


The growth RIAs have observed over the past 15 years is truly remarkable, and if I hadn’t witnessed all of the hard work and dedication firsthand, I almost wouldn’t believe it.

The past year, of course, has been an especially fascinating time for the RIA profession. RIAs have been busy—really busy—both with cultivating growth at the firm level and generating the momentum necessary to propel this industry forward. And, at the rate they’re going, competitors should expect a difficult time catching up.

During our talk, Walt and I had a chance to review some of the implications of the growth over the past year and, more importantly, to envision what lies ahead. Here are five takeaways from our conversation:

   1. Unparalleled success attracts attention

For three decades, RIAs have charted a course of consistent growth— an astonishing track record by any measure. But how was that level of success possible? It’s fairly simple: independent advisors offer what affluent clients expect: expertise, transparency, relationships, and the unmatched professionalism that RIAs bring to the table.

Unsurprisingly though, success at this scale attracts attention, and that attention is increasingly coming from private, outside money. This raises an interesting question for advisors that will be critical to consider going forward: how will this influx of capital change the independent advice industry?

As advisors contemplate all the answers to that question, it is important to remember that RIA success won’t be limited to the realm of M&A, and that the last two quarters of increased activity have been the product of organic growth more than anything else.

M&A makes headlines, but avenues for success in our field go far beyond consolidation strategies. We believe forward-thinking, entrepreneurial firms will continue to drive RIA industry growth just as they have all along.

   2. Strength and security continue to matter

In Schwab’s three-decade commitment to serving RIAs, we've demonstrated our ability to maintain strength and security even in the most volatile environments and situations.

Despite the myriad of complications that arose from the global pandemic—not to mention the Federal Reserve’s Zero-Interest-Rate Policy in response—our financial position in 2020 remained strong and our balance sheet solid.

Bernie quote

"Not only are we continuing  our commitment to and investment in serving the RIA channel, we can assure you that we are the leading choice for the safety and security of your clients’ assets. It will always be job number one."

Bernie Clark, head of Schwab Advisor Services

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   3. Schwab and TD Ameritrade—a collective plus for clients

Schwab’s acquisition of TD Ameritrade has given rise to a new level of investment as we integrate the two firms. As Walt explained, the extreme growth we’ve observed since the announcement has been far beyond our projections.

Extreme growth is always welcome news, but considering volumes that are multiples of what we were planning for, along with where we expect to be five years from now, we are investing even more as we take an incremental approach to meet the future needs of clients in terms of capacity and scale.

We initially estimated 18 to 36 months for integration of TD Ameritrade. We’re pleased that we’ve been able to narrow the window to 30-36 months within that same timeframe, which will  be between April and October of 2023. We have been pleased to discover a natural harmony between our two platforms and cultures, which makes integration that much more exciting. I share Walt’s confidence that Schwab and TD Ameritrade will be able to do more together than either firm could on its own and most importantly that our clients will benefit from our collective size, scale, and strength.

   4. New frontiers for talent (but some things never change)

Due to the success of remote work and hybrid arrangements, the very nature of competitive hiring has shifted. The amount of flexibility being offered today has changed how potential new hires are making their final decisions.

Walt and I agree that as things continue to change, the desire of talented people to do meaningful work and affect others’ lives in positive ways remains the same.

Competition for talent in the RIA industry will continue to be fierce, but the dedication RIAs have to operating businesses with purpose and a singular focus on what’s best for their clients should ultimately preserve  the leg up they have on the competition when it comes to talent.

   5. Getting back to face-to-face matters

Despite how well remote arrangements have worked for our company and so many others, Walt and I have both missed the face-to-face component of the work we do. We're excited to finally interact with our clients and team members in person on an increasingly regular basis.

As I expressed to Walt during our conversation, I have felt like I lost one of the best parts of my job during the pandemic, which has always been being out on the road with clients, sharing ideas, and having earnest conversations about how we can help one another—in business and on a personal level as well.

Luckily, I also believe that this remote period has taught us quite a bit about what works and what doesn’t, and that our time apart will ultimately have informed and enhanced the way we spend our time together going forward. And I, for one, am ready.

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The information provided here is for general informational purposes only and should not be considered an offer or solicitation or advice to buy or sell Schwab stock.

Investing involves risk, including loss of principal.