Industry leaders puzzled by RIAs' being paid by Schwab and Fidelity for investing in funds
Some RIAs see it as an unacceptable conflict, but the custodians are unabashed about the arrangements
Related Moves
Mark Tibergien sets up Ben Harrison to challenge Schwabitrade with a $150 million cut to Pershing's minimum and millions more to develop Veo-busting technology
The CEO suite hand-off in Jersey City pulls a trigger on a plan to bypass Fidelity's and eventually Schwab's custody units by luring disaffected RIAs.
March 11, 2020 at 7:58 AM
Pershing restores Ben Harrison as sole heir to Mark Tibergien -- for now -- but solo tenure may be temporary, with other top talent in the wings
Co-Head Maura Creekmore's departure leaves Harrison at the top by default, but the company is mum on future hiring and how much RIA autonomy gets sacrificed in name of 'convergence.'
January 19, 2023 at 3:31 AM
Behind the scenes, Ben Harrison's rise to replace Mark Tibergien at Pershing was more shock and awe than a symphonic succession
Harrison's appointment was baked in the cake -- or not -- and Tibergien departed with Swiss-watch precision in Moss Adams-style--or not.
March 13, 2020 at 7:22 AM
TD Ameritrade's board suddenly pushes out Tim Hockey after his big misread of RIAs; Tom Bradley name-dropped as successor
The CEO broke the TD promise never to compete with RIAs, took it back and got sent packing
July 23, 2019 at 4:30 AM
See more related moves
TD Ameritrade
Asset Custodian
Top Executive: Tom Nally
Nexus Strategy
Consulting Firm
Top Executive: Timothy D. Welsh
Pershing Advisor Solutions
Asset Custodian
Top Executive: Mark Tibergien
Private Advisor Group
Specialized Breakaway Service, RIA-Friendly Broker-Dealer, RIA Serving Other RIAs
Top Executive: RJ Moore, Chief Executive Officer
Team Hewins
RIA Seeking to Hire Advisors
Top Executive: Roger Hewins
Jim McGuire
Thank you Schwab and Fidelity for further confusing the consumer. Brokers ordinarily receive such payments while RIAs who sit on the same side of the table get paid by our clients’ directly. If these back-door, “mystery deals” permeate to consumer circles, we’ll be no better off than the brokers who collect such renumeration.
On Schwab’s website, http://www.riastandsforyou.com/benefits-of-an-ria.html on point #2 “You know what you’re paying for. I love reading the fact their explanation “this fee structure is simple, transparent, and easy to understand, and it gives your advisor an incentive to grow your assets.”
Schwab, perhaps you can be transparent and explain the particulars of these payments in a simple, transparent, and easy to understand fashion and also further explain, why some RIAs receive these incentive dollars and not others. Surely you have a policy manual waiting to enlighten us?
Rob Isbitts
Good call, Jim. This is yet another reason why advisors should be looking toward individual equities and away from mutual funds as the core of their portfolio. Mutual fund-advisor relationships are becoming more poisonous by the day. All the while, the client simply wants to know that they are investing in something that makes sense. Individual stocks, carefully chosen and with client-specific volatility tolerance in mind, are far less confusing than what funds have become. And with the new ETF OneSource lists, the virus may spread there.
Ben Stein
No more confusing or befuddling than how Schwab, TD, Fidelity and others “monetize” RIA order flow by selling those orders to select “preferred market-makers” who trade against those customer orders by peeling off pennies and even nickels and dimes courtesy of their ability to arbitrage between the “screen-based markets” and the prices that are not displayed. The customers are purportedly getting 'best price execution’—but the industry has made it such that there is no real definition for best ex that customers can rely on. Yes, Schwab and TD will say : “but our customers get commission-free execution, so everybody wins!” Those folks should form a formal consortium and hire Sgt. Schultz to be their PR spokesperson.
