By Lisa Shidler

Vertical integration from product to process as a low cost means to deliver value to the consumer is profound as machine learning algorithms emerge for advisor use.  Blackrock, Vanguard, Schwab and other TBD vendors can completely change our conceptualization of expert authenticated financial services and how they are delivered most cost effectively. This is not a product play but answers the question how can we avoid having 40% of the client's earnings on their retirement savings being lost to brokerage fees, commissions and administrative cost. It is a process play as a means to win market share based on the integration of value added financial services conventional brokerage is reticent to support. Low cost, high value added financial services in support of fiduciary duty and professional standing result. Extraordinary! SCW

Charles Schwab & Co.'s vertical play to monopolize ETF market -- to be its low-cost maker, distributor and manager -- diesels ahead as ETF OneSource grows again

BlackRock

iShares

Morningstar

Schwab Advisor Services

Charles Schwab & Co.

Kevin McDevitt

Christopher Bliss

John Greves

Alex Bryan

A look at the numbers shows that exchange traded funds are starting to move in lockstep with RIAs and vice-versa. RIAs invested $496 billion in ETFs in the 12-month period ended June 30, 2015 – that’s a $78 billion increase compared to the same period the year before. By comparison, the wirehouse channel added 20% fewer ETF assets, or $397 billion in the last year; granted, an amount that was $70 billion greater than its aggregate investment during the same 12-month period the year before, according to Broadridge Financial Solutions. RIAs that manage portfolios and make discretionary investment choices for their clients value ETFs because they provide advisors with easy access to market segments at a cheap price – an especially important factor for RIAs who are compensated on an asset-fee basis. Fee-based advisors appreciate ETFs’ tax efficiency, liquidity and broad exposure at low cost. Conversely, RIAs are a prized channel for ETF-makers like State Street, Invesco, PowerShares, Vanguard Group and BlackRock. ETFs are also a major ingredient in portfolios devised by robo-advisors -- essentially automated RIAs -- for the mass affluent who invest more than 90% of their assets using ETFs.

ETFs

San Francisco giant executes macro strategy to underprice Vanguard, get paid big bucks to sell third-party funds for free, sell ETF portfolios gratis in its industry-leading robo-advisor and keep custody of $1.4T of RIA assets fast-converting to ETFs

Charles Schwab & Co.'s vertical play to monopolize ETF market -- to be its low-cost maker, distributor and manager -- diesels ahead as ETF OneSource grows again

Stephen Winks

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Charles Schwab & Co.'s vertical play to monopolize ETF market -- to be its low-cost maker, distributor and manager -- diesels ahead as ETF OneSource grows again

Stephen Winks

Related Moves

January 11, 2025 at 3:01 AM

January 13, 2023 at 3:01 AM

January 2, 2025 at 10:49 PM

November 14, 2024 at 7:23 PM

RIABiz Directory

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