Trevor Callan, CEO of Callan Capital talks about how Schwab played a critical support role in his firm’s transition to independence.
Considerations: You and the RIA Option
What to think about as you decide if becoming an RIA supported by Schwab is right for you
The Financial Considerations
Generally, the more independent you go, the more revenue you keep.
In the RIA model, the term “payout” goes away, therefore RIAs, unlike with traditional firms or contractors of independent broker dealers—manage their revenue directly and reinvest it in the business as they see fit.
There may be increased earning potential as an RIA, as well as an opportunity to build equity and create a transferable asset with significant enterprise value.
Positioned for the future?
For more detailed information on the current RIA earnings environment, read our white paper .
The Legal Considerations Advisors face myriad legal and regulatory considerations when they decide
to go independent as RIAs.
While it can seem daunting, many RIAs have successfully managed these same challenges by securing experienced legal counsel and following well-define procedures, you can manage these elements too.
Want to Learn more about the legal and compliance considerations? Read the Legal and Regulatory Considerations White Paper.
Managing Your Brokerage Business Some advisors moving to an RIA will want to provide their clients both an advisory and a traditional brokerage option.
Advisors who manage both advisory and brokerage business work under a "hybrid" business model and establish both an advisory relationship with their custodian and affiliate with an independent broker dealer for their brokerage business.
Schwab's experience and support can help you make an informed decision about whether the hybrid business model is right for you.
For in depth information on the hybrid model and considerations for advisors in transition, download our white paper Understanding the Hybrid Practice.
Our hybrid platform provides choice and flexibility to help you meet the needs of your clients and your business. Download more information on Schwab's Platform for Hybrid Advisors.
Starting a Firm Versus Joining One Choice and control is what the RIA model is all about. If independence appeals to you, there are multiple paths to becoming part of this growing channel.
Assessing the degree of control and responsibility you want to take on as an RIA can help you determine whether you would prefer to join a firm or start your own. For example:
Do you want to own your own business with full control over all aspects, including the back-office?
Do you want to have control over your practice, but leverage the centralized infrastructure of a large firm?
Do you want to be a partner in or employee of a small, yet established firm?
Starting a Firm If you want to run your own business, consider starting your own firm. You may want to see your name on the door and in exchange, be willing to accept the responsibilities and risks associated with owning a business, such as staffing and revenue and expense management.
Joining a Firm If you want to have input on—but not sole responsibility for—important aspects of the business such as compensation, expense management and marketing, considering joining an existing RIA firm. This may allow you to gain a partnership or an equity stake.
For more information about the options for becoming an RIA, visit our RIA Tutorial.
Starting vs. joining a firm? Read this PDF to learn more about what you should consider
The Transition Process The future you envision starts with the knowledge, experience and dedication of Schwab Advisor Services. We've helped hundreds of advisors like you make the move to the RIA model. Whether you launch a new firm or join an existing one, we’ll guide you through the process step-by-step.
Single Point of Contact
You are appointed your own business development officer (BDO) who:
Discusses possible options with you
Consults on the transition process
Will help you customize your transition plan depending on your vision for your business and what kinds of products you want to offer
Transition Plan
Cost expectations
Earnings expectations
Steps to implementation
Transition and implementation schedule
Schwab or third-party solutions*
Transfer Client Accounts
Your BDO oversees the asset transfer process, coordinating a dedicated team to:
Help transfer your clients’ assets to the Schwab platform
Help you process client data and complete paperwork in your office
Communicate transition milestones and troubleshoot issues
Set up the team that will provide you with ongoing, post-transition service
For advisors launching their own firms, we offer a suite of start-up solutions supported by Schwab and industry third-party resources—all of which can be tailored to meet advisor’s strategic objectives.
* These services are provided by third-party firms who are not affiliated with or employees of Schwab.
Schwab Performance Technologies (“SPT”), like Schwab, is a subsidiary of The Charles Schwab Corporation. Schwab provides brokerage services, while SPT licenses software and provides related technology products and services. PortfolioServices is a product of SPT.
“I definitely think there will be a point in this transition where you look back and say it was the best thing you ever did. It probably wasn't five days after I made the transition, but five months later. I can say that there's no question- there's no looking back. It, by far, was the best career decision I’ve made. And, you know I thoroughly expect that it will continue to be a great experience.”
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