More brokers join established RIAs, Schwab says

A growing number of breakaway brokers are joining existing registered investment advisory firms, rather than setting up new ones, 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 last year, 42% went to existing RIAs.

The trend continued in the first quarter as 40% of the brokers leaving for the RIA channel 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, just 15% of the 123 new teams, which had $13 billion in assets, joined another firm.

About 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 new talent on board.

The firm’s efforts may have contributed to the decisions of advisers to join existing practices, Mr. Clark said.

Adding on an established practice can produce a quick boost in revenue 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.

E-mail Dan Jamieson at [email protected].