All too often, advisor conferences don’t make much news. This week’s annual Charles Schwab IMPACT conference in Boston, the industry’s largest, was not one of those conferences.
Schwab’s controversial decision to raise the minimum asset level for an RIA client referral to $5 million, while also planning to add thousands of new advisors to its own retail network, raised plenty of eyebrows among the 6,000 conference attendees.
Other hot-button topics included concerns about the cost of Claude for Financial Advisors, Schwab’s joint venture with AI heavyweight Anthropic and Schwab CEO Rick Wurster’s pledge to stay committed to RIAs with assets under $100 million. That follows rival Fidelity’s decision to boot small firms from its custodial platform.
Rick Wurster
Long-short ups and downs
Wurster also discussed how Schwab is dealing with fallout from its decision to offer popular long-short tax investment strategies during his keynote address to conference attendees on Wednesday.
Although the long-short offerings were quickly oversubscribed, their complexity proved risky, and Schwab then limited the product to clients with a minimum of $10 million in assets, shutting out many upset advisors. The custodian is now “working with third-party providers” to expand options, while also developing a proprietary offering, Wurster said.
He also touted a new “structured asset lending” program and generative AI agent for retail clients as well as a strategic partnership with AI operating platform provider Nevis and a new tax and estate planning tool for advisors from Wealth.com.
Among the speakers at the conference was Jon Beatty, head of advisor services at Schwab .
Jon Beatty
Custodian competing for retail clients?
Raising the referral minimum to $5 million hit a sensitive nerve for firms that depended on the referrals, whose minimum just a year ago was $500,000, for much of their “organic” growth. Rubbing salt in the wounds, many felt, was the news that Schwab planned to hire thousands of new advisors for its own Wealth Advisory retail division.
Wurster was asked by an advisor during a Q&A session why Schwab was opening up so many brick-and-mortar branches if it was not competing with advisors.
He replied that the custodian had four central offices and 400 branches and wanted to expand Schwab Wealth Advisory from 20 to 30 cities. New advisors were being added to “support” existing advisors, according to Wurster. “We do not go out into the local market looking for new wealth business,” he declared.
If an advisor found Schwab directly competing for a client, Wurster said they should call or email him personally, claiming he had only gotten one email about such an issue to date, “and it was resolved quickly.”
One advisor who asked not to be identified was skeptical, saying that the new crop of Schwab’s in-house advisors “put a wall between us” and “makes you wonder if Schwab has our back.”
Claude draws praise and concerns
Advisors interviewed at the conference welcomed the new AI capabilities that Claude for Advisors could bring them, but had concerns about compliance and regulatory issues. What’s more, smaller firms were upset that they wouldn’t be able to meet Anthropic’s requirement that RIAs have to buy at least 20 seats at $4,800 annually.
As a result, Schwab is offering RIAs a $4,800 “usage credit” if they sign up for Claude by the end of November. But Anthropic has no plans to drop the 20-seat minimum for RIAs, said Peter Nolan, Anthropic’s head of asset and wealth management.