RIA Advocacy

February 14, 2019
Submitted by robert.f.davis on February 22, 2018

RIA Advocacy

Investor awareness and education

We believe in the independent financial advisor model and what advisors do every day to serve their clients. We know the power of advice from an independent financial advisor, and believe it is one of the best solutions for investors with complex financial needs. We also know there is a real gap between the number of people who should know about independent advisors and those who actually do. We have made it our mission to help educate investors on the benefits of working with an independent advisor through a national advertising campaign, and other efforts to bring attention to the services that you provide.

  1. Our national advertising campaign
    This education and advocacy campaign is fueled by a passion to help investors understand the difference that working with an independent advisor can make.

    We run daily digital ads that help raise investor awareness on sites targeting the ultra-affluent, and print ads in publications including the Wall Street Journal. These ads drive readers to an educational website where they can learn more about working with an independent advisor, and use our online directory to find firms in their local area. Advisors on the Schwab platform can access marketing tools through an online marketing hub, including tips, brochures, and digital assets to use in their own outreach efforts.
Working together to shape the future of the industry

Schwab has been the leading advocate of registered investment advisors (RIAs) for more than 30 years. Our dedication to the continued growth and success of the RIA model is reflected in a wide range of efforts specifically designed to support independent advisors and help move the entire industry forward. From educating investors about the value of working with an RIA, to advocating on behalf of RIAs in Washington, D.C., we are committed to putting our weight behind powerful initiatives that advance RIA interests and prepare this industry for the future.

Strategic guidance and insights that drive change
Charting a course for the future is vital to the success of independent Registered Investment Advisors. Schwab can help fuel this success by providing independent advisors with strategic guidance and insights that enable them to take advantage of trends and opportunities in the marketplace.

  1. Charles Schwab Generation Now Study for RIAs – As the population ages, the balance of investable wealth is shifting from baby boomers to their successors. In fact, investors between 30-45 already control nearly $3.5 trillion in investable assets1. These factors are leading to what we believe is one of the most significant opportunities for independent advisors in the next decade. However, in order to better serve this growing demographic, independent advisors will need to understand more about them—their beliefs, their expectations and their relationship with money. To help, Schwab Advisor Services conducted a qualitative research study on a group of high-net-worth 30- to 45-year olds, whom we're terming “Generation Now” because they follow on the heels of advisors' current pre-retired or retired clients. The results will give independent advisors unique insight into how best to approach and serve this new generation.

    Get to know Generation Now: Independent Advisor Outlook Study (IAOS) – A semi-annual study designed to measure independent advisors' views on a variety of industry topics. The study reflects the views and opinions of over 700 advisors representing an estimated $180 billion in assets under management. The RIA Benchmarking Study from Charles Schwab – This annual study allows advisors who participate in the study to gain insights into their firm's key business metrics relative to their peers which can help them evaluate and assess their business, identify areas of strength and opportunities, and develop a plan to achieve their business goals.
  2. Charles Schwab Women and Financial Independence Study – This study was conducted to provide some real insights into who high net worth women are, and what they are seeking from advisors.
Legislative and regulatory affairs advocacy

Through Schwab's Office of Legislative and Regulatory Affairs, we encourage the creation of responsible government policies that positively impact the RIA industry. We closely monitor the pulse in Washington to anticipate threats to the industry, communicate business critical news to our advisors, and coordinate effective responses. Bernie Clark, executive vice president of Schwab Advisor Services, and other senior Schwab leaders, have been instrumental in propelling advisors' interests forward by regularly meeting with lawmakers and the SEC to discuss matters important to RIAs. By having a seat at the table, Schwab can help ensure that advisors voices are heard.

  1. Schwab's recent lobbying efforts to support advisor interests
    Now is a pivotal time in the RIA industry, with multiple legislative and regulatory changes under consideration that could have a direct impact on advisors and their clients. Learn more about recent proposals and how Schwab has taken action:
    1. FINRA rule on discretionary account requirements – As part of updating its rulebook, FINRA has proposed that custodians like Schwab obtain the manual signature of an authorized person at an RIA on the brokerage application or form that grants the advisor authority to trade or move money in a client’s account. Schwab worked with its fellow custodians TD Ameritrade, Fidelity, and Pershing to draft a comment letter (8/15) that points out the unnecessary burdens and expenses that would be imposed on advisors, their clients, and their custodians. A new wet signature requirement would serve no investor protection purpose while raising competitive fairness concerns. 

      Department of Labor proposal to expand its definition of "fiduciary" – Expansion covers, among other things, one-time securities recommendations, referrals to investment advisors, and recommendations to rollover a 401(k) into a managed IRA. Schwab submitted a comment letter (7/15) that acknowledges the need to apply a fiduciary standard to investment recommendations in order to protect IRA investors, while also asking the DOL to establish a reasonable exception or carve-out to ERISA prohibited transaction rules. Such a modification is necessary to allow firms like Schwab to continue to recommend independent RIAs or managed account programs, and to allow independent RIAs to continue to recommend to their clients that they rollover assets into an IRA.

      SEC proposed amendments to Form ADV Part 1A – Designed to enhance the data the SEC receives to conduct risk-based examinations, the proposed changes will require more information about advisors' "separately managed account business," meaning individual client accounts that are not pooled investments. This includes new aggregate information on assets held in those accounts, such as information on regulatory assets under management, and use of derivatives and borrowings. Schwab filed a comment letter (7/15) recommending that a final rule make certain clarifications and increase reporting thresholds to help minimize the burden on investment advisors.
  1. The SEC and rule "harmonization"
    The SEC is considering harmonizing rules followed by broker-dealers and RIAs, the effect of which could be devastating to advisors. Schwab developed a white paper to educate advisors about the issue; and in response to a 2013 request from the SEC for data and information Schwab conducted a survey to gather advisors’ perspectives on the impact that rule harmonization could have on their firms. By rallying more than 800 advisor responses, Schwab was able to send a unified response to the SEC clearly showing the burden harmonization could have on RIAs and the industry.

    Lobbying Day with the Investment Adviser Association
    Each year, Schwab joins the Investment Adviser Association for Lobbying Day, an important day of advocacy in Washington, D.C. Bernie Clark and a contingent of Schwab executives and advisors take this opportunity to educate legislators about the RIA model, helping to put a real face on a local industry.

    "STAND UP, SPEAK OUT" write-to-congress campaign
    Schwab launched an RIA advocacy campaign at IMPACT® 2013 that provided an easy way for attending advisors to send a message directly to their congressional representatives. The message highlighted the value of independent advice, and underscored how some potential regulations could negatively affect advisors' ability to serve their clients effectively. Through this campaign, advisors sent nearly 900 emails to members of Congress.

Encouraging the next generation of advisors
Schwab wants to help cultivate the next generation of advisors who will drive and support the future needs of the industry. We have invested extensive resources to do just that, providing visibility, research, and insights—as well as creating several programs to promote the development of talent, including:

  1. University partnerships and student grant program
  2. Schwab Foundation donates millions of dollars, along with other resources, technology, and facilities, to support financial planning education.

    Student program at IMPACT
    The student program at IMPACT enables students and faculty from leading financial planning programs at top universities to attend Schwab's premiere RIA industry event. During this conference, the program actively connects students and faculty with RIA advisors, allowing students to explore potential career opportunities while providing firms with a promising source of new talent.

    RIA Student Intern Program
    A rotational internship designed to increase awareness of the RIA model, prepare recent college students for future employment with RIA firms and create a source of high quality talent for our clients.

Supporting business excellence
Schwab also supports RIAs' individual professional development. We provide resources and programs that empower advisors in their pursuit of excellence, and recognize high achievers for their vision and leadership.

  1. Schwab Executive Leadership Program
    This elite training program launches in 2014 and focuses on developing leadership, innovation, talent management, strategic marketing, and entrepreneurship skills to help prepare leaders to manage and grow their firms.

    Business consulting
    The Schwab business consulting services team leverages the expertise of dedicated Schwab professionals to provide education and enrichment opportunities. Team managers engage with advisors one-on-one, in their offices, to help their RIA firms implement meaningful changes that will help optimize their business.

    Schwab Advisor University
    Online courses that help advisors use tools and technology to maximum effect.

    College for financial planning
    This program supports advisors who want to take courses for designations or continuing education.

    Schwab puts on hundreds of industry events a year, culminating in IMPACT—the industry's largest RIA event. IMPACT annually brings together thousands of independent advisors from across the country along with key political, philosophical, and entrepreneurial thinkers.

    IMPACT Awards
    These annual awards honor advisors who have achieved success through exemplary business practices, client and industry advocacy, and entrepreneurship.

Women's Initiative
More than ever, wealthy investors are likely to be women. In 2013, women controlled 51% of all U.S. personal wealth assets, and the percentage—as well as the total worth of those assets—is expected to climb steadily1. Schwab is focused on helping advisors understand and appreciate this growing market opportunity, providing research, tools, and best practices (including the Women and Financial Independence Study, webcasts, and educational sessions).

As investor demographics undergo a transformation, the advisor industry itself is struggling to evolve along with that sea change. Only about 30% of all financial advisors are women2. The disparity is even more dramatic in the RIA space with almost half of all advisors surveyed reporting that they had no female advisors at their firms3.

Schwab is dedicated to helping RIAs and the industry move forward on both fronts—engaging and empowering more female investors while providing opportunities and support for advisors to actively recruit, train, and mentor more female advisors. The Women's Initiative includes:

  1. Women's Advisory Council
  2. Composed of a select group of women advisors in leadership positions, this group comes together to find ways to make positive change for women in the RIA industry.

    An amplified voice
    Schwab is committed to promoting successful female advisors through advertising, public relations, speaking opportunities, corporate sponsorships, and other efforts that give advisors who are spearheading change a voice and platform to help move the industry forward.

    Networking opportunities
    Central to the Women's Initiative is the ability for RIAs to build and nurture connections and strong working relationships among advisors through networking events.