Schwab moves on Altruist advisors after Vanguard's $4.6B acquisition

The top RIA custodian is moving quickly to court Altruist advisors following the startup’s $4.6 billion sale to Vanguard. 

Since Vanguard announced the deal Aug. 26, multiple Altruist users have said publicly on LinkedIn that they received calls from Schwab representatives seeking to discuss the acquisition and Schwab’s custody offering. Mike Mickels, president of Alabama-based RIA CochranMickels Retirement Specialists, wrote that he had received “a phone call from Schwab Advisory Services” to discuss the Vanguard acquisition and confirmed Schwab initiated the outreach to InvestmentNews. 

Mickels said he has custodied with Altruist for three years and did not seriously consider Schwab’s outreach. He adds that while “Altruist and Vanguard are simpatico as far as keeping fees down,” he would leave Altruist if it moves towards a wrap-fee under Vanguard, which typically would involve a bundled fee for investment management and other services.  

“I will be keeping my eye out for moves that could hinder my firms independence and any move towards a particular platform. I am gone if they go for a wrap,” Mickels told InvestmentNews.  

Advisor Derek Notman, owner of Intrepid Wealth Partners, wrote that Altruist is the sole custodian of his RIA. Notman said a Schwab rep called him asking if Vanguard's “acquisition was having an impact on my business and if they could help me grow,” but reiterated on LinkedIn that he is committed to staying with Altruist.  

“I also want to point out that we could not be as successful as we are without Altruist,” said Mickels. “We do our own investment management and design and monitor our own portfolios.  Altruist's platform is second to none in the industry.” 

The question of how much separation Altruist advisors will have from Vanguard’s investment products was also raised by Fusion Financial Partners CEO Mike Papedis. 

“Vanguard has historically reached independent advisors primarily through its investment products. Altruist puts Vanguard much closer to the infrastructure through which advisors actually run their businesses and deliver advice,” said Papedis. “I wouldn’t speculate about future product pricing or transaction fees, but the combination of asset management, custody and advisor technology is strategically significant.” 

A spokesperson for Schwab did not respond to a request for comment regarding outreach to Altruist advisors following Vanguard’s acquisition. Schwab has a dominant market share of the RIA custody market, with their $5.7 trillion in custody assets across 16,000 independent RIA firms, while the tech-forward Altruist serves over 6,000 RIAs. 

“A key part of Altruist's sales pitch was that unlike Schwab, they don't compete for your clients,” said Pebble Finance CEO Justin Whitehead. “Given that Vanguard is buying them as part of a push into the RIA space, is there a risk of that changing? Or might Altruist-clearing advisors benefit from a possible referral relationship with Vanguard?” 

Schwab made another recent client asset minimum increase to its RIA referral program, which comes as the brokerage expands its in-house advisor branches and headcount. Vanguard’s custody acquisition for Altruist appears to be a cost-efficient way for the fund giant to enter the business of RIA assets, says advisor recruiter Louis Diamond of Diamond Consultants.  

“They [Vanguard] can service significantly more end clients without having to build a massive branch network like Schwab and Fidelity and others do,” said Diamond. “Instead of building thousands of retail branches with financial advisors, you can tap into it in a different way.”