Charles Schwab is adding to its RIA robo advisor offering, heeding demand among its users. But resistance to automated investing remains among some planners and competitors.
The custodian is building out new enhancements for its RIA robo, Institutional Intelligent Services, according to Lauren Wilkinson, Schwab’s vice president of digital advisor solutions.
One new capability is support for clients with inherited IRAs. The custodian has also introduced features aimed at streamlining client onboarding. RIAs using the platform can now open client accounts, and the time needed to convert a brokerage client to an automated account has been reduced from a couple days to “matter of minutes,” she says.
The company said it is investing in these updates as it experiences increasing demand for the product. “We’re seeing three to five new firms per week sign on for the offer,” Wilkinson says.
In total, there are over 1,100 RIAs using the technology. Schwab's robo has 340,000 client accounts across the retail and institutional divisions.
There are still advisors who have mixed opinions about the RIA automated platform though.
Steven Tenney, CEO of Great Diamond Partners, a $420 million RIA custodying at Schwab, was impressed by the offering when he selected Schwab as his custodian
“I saw it as a possible outlet for us for smaller and or younger clients and a way to greatly simplify the administrative part of our business,” Tenney says.
But after doing more research and having conversations with peers, he has since changed his mind, noting he doubts his RIA will adopt it.
“A number of firms are either backing away from it, meaning going to stop using it, or it really has not been very impactful. I’m a big believer in learning from others,” he says.
Similar doubts exist among one of Schwab’s competitors. TD Ameritrade’s RIA division contemplated getting into the space, but decided against it, Tom Nally, head of the division,
“We haven’t seen a lot of advisor adoption of that kind of technology,” he said.
But Schwab insists that not only has adoption of the platform has been strong, advisors are expanding usage within their own firms.
“It's really not just about small accounts anymore,” Wilkinson says. “They're finding this to be a cost effective way of serving accounts of all sizes, and that it particularly appeals to those clients who are cost-conscious and looking for a tech-savvy kind of solution.”
Tax-loss harvesting and automatic rebalancing capabilities are particular points of appeal among clients, she notes.
Wilkinson declined to comment on the average account size on the platform and how much the company had spent on the updates.
The firm also increased the number of funds available on the platform to 2,700 mutual funds and 1,400 ETFs and added custom drift settings.
In total there are
