Our US correspondent Charles Paikert attended the Schwab Advisor Services Midyear Media Roundtable yesterday, where plans to do more lending, target the ultra-high net worth market, and boost its artificial intelligence build-out were highlighted.

Charles Schwab, a large Texas-headquartered financial services firm, is expected to do more lending, target the ultra-high net worth market, ramp up its artificial intelligence build-out, and begin to custody crypto assets next year.

Registered investment advisors (RIA) can also expect to see a larger Schwab retail presence (the company insists that is not really competing with them) in upscale markets across the country by the end of the year.

“The advisor’s role is changing quite quickly, and services like lending, which used to be exclusively with banks, are now a more integral part of the conversation [with financial advisors],” said Jalina Kerr, Schwab’s head of advisor experience and platform solutions, speaking at Schwab Advisor Services Midyear Media Roundtable.

Clients working with RIAs who custody with Schwab can borrow money against their custodied assets and alternative investments to finance home purchases and renovations. Only one quarter of advisors are “actively using” the lending service, Kerr said, a percentage she expects to dramatically increase as clients and advisors have more “balance sheet conversations.”

UHNW Ambassadors
Schwab is also targeting the lucrative but elusive UHNW market. “Most RIAs are going upmarket,” Jon Beatty, head of Schwab Advisory Services, said at the media roundtable. The custodian, which works with 16,000 advisory firms in the US, rolled out a â€śUHNW Ambassadors” program this year as a “consultative model” for advisors working with wealthy clients. 

Although “still in learning mode,” the program has been “overwhelmed” with interest from advisors, according to Kerr. The ambassadors help advisors offer UHNW clients “liquidity solutions” and private bank type services such as events and experiences, Kerr said.

Like every other company in the industry, Schwab is scrambling to keep up with the rapid rise of AI.

Connectivity and crypto
Artificial intelligence is allowing advisory firms to have “institutional grade capabilities…unlocking scale” and provide clients with “meaningful personalization,” Alison Dooher, head of Wealth Services and Platforms for Schwab, said at the media event. Kerr called AI “the great equalizer” for enabling clients to have far more data and information than ever before.

Connecting new artificial intelligence software with advisor’s existing fintech stack is Schwab’s top priority, Dooher said. The custodian wants to ensure â€śbetter connective tissue for advisors,” she added, and is currently working on over 70 fintech integrations as well as transactional APIs such as onboarding clients and cash transfer.

Schwab will offer spot trading for cryptocurrencies and allow clients to transfer and custody crypto assets by mid-2027, Kerr said. “Interest is growing significantly,” but “it’s a difficult build,” she noted.

Retail competition? What retail competition?
While Schwab didn’t tout its retail expansion in press releases or at the media event, the news that the company is expanding its “Wealth Advisory” offerings to 30 upscale markets by the end of the year leaked out after its Institutional Investor Day event on May 14.

Understandably, its RIA customers weren’t thrilled with what some saw as direct competition for clients. When asked about the retail expansion Beatty was unapologetic and said any RIA concerns about competition were misplaced.

Schwab is “passionate about serving all clients” whether through advisors or directly, he said. Wealth Advisory services have been around for more than a decade, and Schwab “rarely bumps into” RIAs competing for the same client, Beatty maintained. “There is more than enough for everyone to have success,” he said, noting that there is an estimated $37 trillion in household assets not managed by RIAs.