Last week, Charles Schwab launched OneSource, a new ETF platform to trade ETFs commission-free online. Beginning on February 7th, Schwab clients can trade 105 ETFs with $0 commission fees. Wow, the custodian battles continues! pressroom.aboutschwab.com/press-release/schwab-investor-services-news/schwab-launches-schwab-etf-onesource
The initiative by Schwab is part of the greater competition among custodians to attract investment assets from the growing number of Registered Investment Advisors. According to Tiburon Strategic Advisors, RIAs are the fastest growing financial services distribution channel. The total assets under management for RIAs has surpassed $2 trillion, nearly 10% of the financial advisory market.
According to the Cerulli annual report, this transition into the RIA space is largely being driven by advisors' desires to operate their practices independently. RIAs are seeking enhanced brand recognition, as they distance themselves from brand name firms hit with negative news coverage.
Other factors include, the growth of technology platforms as another driving force, according to Cerrulli. RIAs can now establish a technology infrastructure comparable to an environment at a wirehouse or a bank.
Now, it appears RIAs can leverage low cost investments, like ETFs, as another driver for advisory firms to breakaway from a wirehouse or bank environment. And the custody battles continues.