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Are Schwab’s independent branches an opportunity or a threat to RIAs?

For RIAs with financially profitable practices that meet their lifestyle needs, I think owning a franchise would take them back a few steps.

Author Stanley F. Ehrlich Guest Columnist December 9, 2011 at 4:03 PM
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Stan Ehrlich: Why does Schwab want to franchise its brand and potentially put itself in conflict with some of its own RIAs, such as me and many of my peers in NAPFA?

Stan Erlich

Frederick Van Den Abbeel

Frederick Van Den Abbeel

December 9, 2011 — 5:39 AM

I believe there is a very simple question to determine if your custody provider competes against you. It is simply: “Do you operate a retail side?” It seems with all of this side-stepping around the issue and walking on egg shells I’d have more respect if they simply said “Yes” — we do compete than try to denounce the obvious.

Elmer Rich III

Elmer Rich III

December 9, 2011 — 9:00 PM

Is the glass half full or half empty? Both. The direct to consumer brand power of Schwab blows away any local of individual RIA branding. The scales and, perhaps, market segments, may be completely separate and not cross much. If a client wants the “security” of a big brand they can go direct.

The question of cannibalization is one that deserves some study. If we were on the Schwab BOD we would have wanted to see research on this before decisions were made. It sounds like it was Ready, Fire, Aim.

It seems realistic to assume there will be warring inside of Schwab between the two divisions.

Mentioned in this article:

National Association of Personal Finance Advisors
Top Executive: Geof Brown, CAE

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