By Andrew Welsch

Charles Schwab plans to launch a new service to help financial advisors who manage modest amounts of money to launch and grow their own independent firms.

The Westlake, Texas-based company already serves as the largest custodian to registered investment advisor firms, safeguarding their clients' assets, executing trades for them, and supplying important technology. But Schwab says it wants to make it easier for advisors to make the leap from being employees of wealth management firms to running their own businesses.

"We want to turn the path to independence into a super highway," says Jon Beatty, managing director and head of advisor services at Schwab.

For advisors who are employees of wealth management firms, launching their own independent RIAs can entail tasks they are unfamiliar with, such as setting up the technology to run their businesses, developing marketing plans, and managing human resources.

Schwab says the new program, called Schwab Advisor ProDirect, will offer advisors what it calls "high-touch help" as they plan their move to independence, as well as access to dedicated consultants, and a community of other advisors.

It will also introduce them to "vetted, curated" third-party companies, with pre-negotiated discounts, who can provide them with technology systems, client relationship management systems, and assistance with legal and compliance issues, human resources, and marketing.

"We want to help them handle all that complexity so that they can do what they do best, which is the investment and planning processes," Beatty says. "And we can see a wide variety of providers stepping into this need."

Brad Losson, head of enterprise solutions, adds: "We'll offer a higher level of service than if they just came onto our standard traditional platform. And once that business is established, we have growth coaches that are meant to sit side by side and help these individuals be best in class."

Schwab is targeting financial advisors with about $50 million to $300 million in client assets. Beatty says that focus underscores Schwab's commitment to serving RIAs of all sizes.

The RIA sector is one of the fastest-growing parts of the wealth management industry, driven by customer demand and an outflow of advisors from large brokerage firms such as Morgan Stanley and Bank of America's Merrill Lynch. These so-called breakaway brokers open RIAs because they want greater control over their practices and because they can build equity in businesses they own.

There are other ways to go independent. One is to affiliate with an independent broker-dealer such as LPL Financial. Under that model, an advisor owns his or her businesse but works as an independent contractor of the IBD, relying on the IBD's technology and investment platforms.

Schwab isn't the first firm to offer advisors help in establishing their own businesses. LPL and rival IBD Kestra have specialized programs, for example. And firms like Dynasty Financial Partners help former employees of brokerage firms launch their own RIAs.

But Schwab says Advisor ProDirect targets a group that hasn't received a lot of attention: advisors with modest amounts of assets who want to go the RIA route.

"We believe this is a part of the market that is underserved," Losson says. "Some of the existing platforms target a different spectrum of the market. Or some advisors see those platforms as not the right fit for them."

Beatty says he doesn't see Schwab's new program as competing with these other services. Instead, he thinks they all help improve the appeal of independence for advisors. "This is about bringing more tide into the harbor for everyone, and raising all boats," he says.

Schwab plans to launch the program in July and will charge $5,250 per quarter for it. The program is distinct from Schwab's existing onboarding and custody services for advisors. Like all RIAs on Schwab's custody platform, participants in Schwab Advisor ProDirect won't have to pay a fee for using the platform.

Losson says the program also will appeal to advisors who are already in the RIA sector. "We believe that there are advisors in that cohort who will say, 'I don't need the transition help, but I wouldn't mind reinventing my business in a more scalable way and get access to these resources, capabilities, and growth coaches,'" he says.

Write to Andrew Welsch at andrew.welsch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 20, 2025 09:30 ET (13:30 GMT)

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