Schwab's managed-investing and advisory flows accelerated in the third quarter as the company expanded wealth services. The opportunity is large, but direct advice growth may intensify tension with independent RIAs.
Charles Schwab is investing more heavily in wealth advice after managed-investing net flows reached a quarterly record of $24 billion. The strategy can deepen revenue per client, but it also sharpens a longstanding tension with independent advisers that use Schwab as their custodian.
Advice demand is accelerating
Schwab said managed-investing net flows rose 22% from a year earlier, while Schwab Wealth Advisory net flows increased 55%. The company does not disclose the underlying advisory-flow amount, so the percentage should not be treated as a complete measure of scale.
Management said 37% of current clients report a willingness to pay for advice, while Schwab estimates that its advice business holds about 2% of a $37 trillion market. The company is investing in branches, discretionary portfolios, tax, trust and estate services, and AI-assisted planning.
The RIA conflict
Schwab also serves more than 16,000 independent advisory firms representing $5.8 trillion of assets. That custody network is a major competitive advantage, yet some advisers worry that Schwab's direct offering competes for the same affluent households.
WealthManagement.com reported that Schwab will raise the minimum account size for client referrals to independent advisers from $2 million to $5 million in 2027. It also raised the asset threshold for firms entering the Schwab Advisor Network from $250 million to $500 million. Those changes can concentrate referrals among larger firms while leaving Schwab more room to serve other clients directly.
A second growth path
Schwab is also developing a proprietary version of a tax-oriented long-short strategy. Management did not provide launch timing, but said the product could be operated efficiently from a balance-sheet and operational perspective. Demand has grown quickly enough that capacity has become an industry issue.
The financial question is whether advice growth increases fee revenue and client retention without weakening the RIA ecosystem that feeds Schwab's custody platform. Investors should watch disclosed advisory assets, adviser retention, referral volumes and economics from the planned long-short product. The opportunity is real, but so is the channel-management problem.
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