Schwab White Paper Outlines Case for Joining RIA

As Charles Schwab reports seeing an uptick in advisers going independent, the firm released a white paper to help advisers considering the transition.

“A Case for Starting or Joining a Registered Investment Advisory (RIA) Firm” examines the economics of independence, the adviser’s options for moving forward, as well as the role of the custodian, according to Schwab.

Schwab said it is seeing a shift in momentum of advisers going independent. As of June 30, 74 adviser teams transitioned to independence with Charles Schwab as their custodian, an increase from the 48 teams who made the transition in the first six months of 2008.

Inside the report, a worksheet allows advisers to compare the financials of starting an independent advisory firm versus accepting a forgivable loan from a wirehouse, bank, or similar institution, the firm said.

The report also examines the primary reasons advisers are choosing the independent channel. Independent advisers surveyed by Schwab in 2008 cited providing more personalized service and the opportunity for greater long-term financial success as motivators for starting their own firm (see “RIAs Don’t Regret Going Independent”).

Schwab said the report outlines the considerations of joining an existing RIA for advisers who do not want to create a new firm. It also breaks out key start-up expenses for those who believe that forming their own firm is the best option and the custodian’s role in supporting an RIA.

“Our goal is to help advisers successfully capitalize on the dynamic nature of the independent channel and provide them with information so that they can select a path that they feel is best suited for them and best supports the interests of their clients,” said Barnaby Grist, managing director of strategic business development for Schwab Advisor Services.

The white paper is available here.