Of the 172 new adviser teams that joined Schwab in 2009, fully 42% went to existing RIAs. That's a big change from previous years
A growing number of breakaway brokers are joining existing advisory firms, rather than setting up new registered investment advisory firms, according to Charles Schwab Advisor Services, the custody unit of Charles Schwab & Co. Inc.
Of the 172 new adviser teams, representing $13.2 billion in assets, that joined Schwab in 2009, 42% went to an existing RIA. In the first quarter of this year, “the same 40%” of brokers leaving wirehouses hooked up with existing firms, said Bernie Clark, senior vice president and head of Schwab Advisor Services. For the quarter, Schwab brought in 31 adviser teams with $4 billion in assets.
In 2008, only 15% of the 123 new teams, which had $13 billion in assets, joined another firm. Roughly the same percentage joined established offices in 2007. That year, Schwab recruited 114 teams with $9.2 billion in assets.
Schwab, the industry's top custodial firm, has been hosting training sessions for its adviser clients on how to bring on new talent.
Mr. Clark said the firm's efforts may have contributed to the decisions of advisers to join existing practices.
Adding on an established practice can produce a quick boost in revenues for the recruiting firm, add expertise to the practice and help plan for a succession. A breakaway firm can avoid the difficulties of starting up a new firm, and achieve greater economies of scale by joining an established advisory practice.
Recruiting firms, though, have to be careful to look for a good fit when adding new partners, Mr. Clark said.
“These firms are adding a significant individual, maybe an equity owner [who is] about to become part of the leadership team,” he said.
