Schwab's Strategic Shift in RIA Referral Minimums and Its Impact on the Wealth Management Ecosystem

Charles Schwab's recent decision to raise the minimum investable asset requirement for its Schwab Advisor Network (SAN) referral program from $500,000 to $2 million, effective January 1, 2026, marks a pivotal moment in the wealth management industry according to CityWire. This move, part of Schwab's broader strategy to align with the evolving preferences of high-net-worth clients and its own in-house wealth management services, has sparked debate about custodian-advisor dynamics and the future of independent RIAs. While Schwab executives frame the change as a necessary evolution to better serve "increasing wealth and advice needs," critics argue it consolidates Schwab's control over client relationships and reshapes the competitive landscape.

Strategic Motivations: Profit Per Client vs. Client Volume

Schwab's decision reflects a shift toward optimizing for profit per client rather than sheer volume, a trend accelerating across the industry. By raising the referral minimum, Schwab narrows its focus to households with $2 million or more in investable assets-a demographic that generates higher fees and requires more sophisticated services. This aligns with Schwab's push to compete with its own wealth management division, which offers tailored solutions to ultra-high-net-worth clients.

The firm also increased the minimum assets under management requirement for participating RIAs from $250 million to $500 million. This dual adjustment reinforces Schwab's emphasis on quality over quantity, ensuring that only RIAs with substantial resources and expertise can access its high-net-worth client base. Schwab executives argue this creates a "better-fit clientele" for RIAs, enabling them to focus on complex wealth planning according to Investment News. However, competitors like Altruist caution that the move could ultimately benefit Schwab by reducing reliance on RIAs and positioning the custodian as a direct competitor according to Investment News.

Impact on RIAs: Shrinking Referral Pools and Adaptation Strategies

The $2 million threshold is expected to halve the number of referrals for RIAs dependent on Schwab's network. For smaller RIAs, this could mean a significant loss of growth opportunities, particularly in a market where organic client acquisition is costly and time-consuming. Yet some firms are adapting by diversifying custodial relationships or innovating their service models.

For example, Halbert Hargrove, a California-based RIA with $3.5 billion in assets, has embraced the change, viewing the higher minimum as a way to align with clients who better match its complex wealth-planning focus. Meanwhile, other RIAs are pivoting to custodians like Altruist, which positions itself as less competitive and more aligned with RIA interests. This shift underscores a growing trend toward custodian neutrality, where RIAs use multiple custodians to mitigate operational risks and access a broader range of investment options according to Cornerstone Portfolio Research.

Innovative fee models are also emerging. One proposed approach involves custodians charging transparent basis-point fees to clients while applying statement credits for revenue generated through custodial services, aligning interests across all parties according to Horse Mouth. Such models aim to address the opacity of traditional custodial fees and enhance fiduciary alignment.

Broader Industry Trends: Exclusivity, Technology, and M&A

Schwab's move is part of a broader industry shift toward serving ultra-high-net-worth clients, driven by the profitability of this segment and the rise of AI-driven tools that cater to complex needs. Custodians like Raymond James are capitalizing on this trend by offering fully integrated platforms that include asset management, investment banking, and AI-driven analytics-services that avoid direct competition with RIAs while enhancing their value proposition according to Advisor Hub.

The referral minimum is also likely to accelerate RIA M&A activity. With Schwab referrals dwindling, smaller RIAs may seek mergers to scale their AUM and access alternative client acquisition channels according to Michael Kitces. This aligns with data from the 2025 T3 Software Survey, which notes that 10–20% of RIAs are actively exploring alternative custodial relationships due to a focus on technology, service quality, and operational efficiency according to Altruist.

Conclusion: A New Era of Specialization and Agility

Schwab's $2 million referral minimum is more than a policy change-it is a strategic recalibration that reflects the custodian's ambition to dominate the high-net-worth space while reshaping the role of RIAs. For RIAs, the challenge lies in balancing specialization with agility. Those that adapt by embracing custodian neutrality, leveraging technology, and innovating fee structures may thrive in this new ecosystem. Conversely, firms reliant on Schwab's referrals without a clear alternative strategy risk obsolescence.

As the industry evolves, the interplay between custodians and RIAs will likely become more nuanced. Schwab's move underscores the importance of strategic alignment between custodians and advisors, while also highlighting the need for RIAs to diversify their client acquisition and service models. In this environment, adaptability-not just scale-will determine long-term success.