To keep the clients it has and lure new ones, Schwab Advisor Services, Charles Schwab’s custody business, is looking for more ways to improve and expand the resources it offers RIAs. Next month, the custodian is debuting a new set of tools to help advisors with one of their biggest pain points: Hiring.
Over the last five years, Schwab has collected a “by-far-leading” amount of information on specific jobs and employee compensation at RIAs, according to Lisa Salvi, vice president of Business Consulting & Education at Schwab Advisor Services. This week, using data from more than 11,000 positions it analyzed, the company released its most comprehensive report on RIA compensation yet.
It’s an important topic for RIAs. In 2018, 70% of revenue at firms with at least $100 million under management went toward covering compensation costs, according to Schwab.
But Schwab doesn’t just email RIAs a slide deck with its high-level industry insights about the data that might not be useful to some wealth managers.
Using the data, the company built an in-house tool that enables RIAs to search by zip code and see the median compensation for different positions in that local area. Wealth managers can then use the results to help determine what they should pay their own employees. “Smaller firms especially like it when they are hiring for a new role for the first time,” Salvi told RIA Intel.
And in March, the custodian is giving RIAs access to even more.
In addition to the aforementioned search tool, Schwab is releasing a new set of tools that will serve up sample job descriptions, research, and other related resources to help them source and hire new employees. RIAs have been asking for more data and resources to help them hire and retain talent and Schwab would like to be there every step of the way that makes sense, according to Salvi.
“What we’re trying to do is create a cycle of opportunity. It’s what I think about every single day in terms of my role at the firm,” she said.
Schwab employs consultants like Salvi to meet with RIAs to help them implement changes but improving accessibility to data and self-serve resources is important. Many firms are thinking about changes to their organizational structure and it’s impossible to separate that from compensation. The custodian found that 76% of RIAs plan to high from an external source in the coming year; 42% are recruiting from other RIAs. Out of the 42% of employees from other RIAs, 73% are getting some level equity in the firm they are joining.
Nearly 1,000 RIAs participate in the compensation report, which is a part of Schwab’s annual benchmarking study.