FPA of

Georgia

Bernie Clark
Executive Vice President
Advisor Services
May 24, 2017

Compliance #0517-5UY
 Advisor Services

1,800 Schwab team

members dedicated
to custody, trading
and operations… Representing
Over 7,000 $1.3 trillion in
advisors assets*

*Data as of Q4 2016. Advisor Services total assets includes RBS and Corporate Brokerage Retirement Services
(CBRS) assets and excludes “retail assets” resulting from Schwab Advisor Network and Advisor Source.
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 Today’s Discussion: The Evolving Role of the
Advisor
 Economics/Financial Models
 The Future of Advisory Relationships
 Differentiation
 Next Generation Succession Planning
 Advocacy

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 Economics & Financial Models
Schwab & Industry Asset Growth Profile of an RIA Firm
CAGRs Key Metrics of a $250M+ firm from our
9.7% Schwab ASI Assets 2016 Benchmarking Study1:
9.1% RIA Industry Assets

 Average account size: $1.60M

4.7% S&P 500
 Number of clients: 350
 Year-end AUM: $588M
 Standardized operating margin: 27.2%
 Age of firm: 21 years
2006 2008 2010 2012 2014 2016
 5-year organic growth CAGR2: 5.4%
Note: CAGR is the compound annual growth rate from 2006-2016. Chart indexed to 2006 levels. Source: Charles Schwab; Yahoo Finance.
• Schwab Advisor Services Institutional (ASI) assets exclude Retirement Business Services (RBS) assets. Excludes “retail assets” resulting from Schwab Advisor Network® (SAN) and Advisor Source
• 2016 is a preliminary Schwab estimate assuming 2016 RIA market growth was in line with ASI asset growth
• Excludes dividend yield
2016 RIA Benchmarking Study from Charles Schwab.
1. Median results for all firms with $250M or more in AUM, unless otherwise noted. 2016 RIA Benchmarking Study from Charles Schwab, fielded January to March, 2016. Study contains self-reported data from 1,128 firms. Participant firms
represent various sizes and business models categorized into 12 peer groups — 7 wealth manager groups and 5 money manager groups, by AUM size.
2. Organic growth from net asset flows is the change in a firm’s assets from new, existing, and lost clients before investment performance is taken into account, and it excludes the growth from acquisition or divestitures, and from advisors joining
or leaving.
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 The Future of Advisory Relationships

External forces… will drive internal change.

Specialty
Technology Fee structure
Services

Digital
Millennials Talent
Experience

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 Differentiation

Personal interaction and assistance to

manage aspects of a client’s financial life More
Relationship personalized and
management differentiated.
Potential for
Financial planning, estate planning, building trust and
charitable giving, tax planning, etc.
loyalty.
Value-added
services

Asset allocation, portfolio construction,

ongoing portfolio management
Investment
management

More easily
automated and
replicated.
Potential for
commoditization.

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 Next Generation Succession Planning
Many Advisors are Nearing Retirement

38.5% of advisors 39.4% of assets are

are transitioning transitioning within
within 10 years 10 years

Chart Source: U.S. RIA Marketplace 2016, Cerulli Associates

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 Advisor & Industry Advocacy
RIA industry awareness and talent development
Advocacy  RIA Talent Advantage™

for  University Grants

Advisors  RIA Student Intern Program

 Investment in advocacy advertising campaign
 Executive Leadership Program

Washington DC advocacy
 Department of Labor Fiduciary Rule
 Anti-money laundering
 Ongoing outreach

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 Q&A

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 Appendix & Disclosures
Slide 2
Note: Data as of Q4 2016. Advisor Services total assets includes RBS and Corporate Brokerage Retirement Services (CBRS) assets and excludes “retail
assets” resulting from Schwab Advisor Network and Advisor Source. Schwab Retirement Business Services are provided by Charles Schwab Bank and
Charles Schwab & Co., Inc., separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Brokerage products and services are
offered by Charles Schwab & Co., Inc. (Member SIPC). Charles Schwab Bank provides trust, custody and deposit products and services with respect to
retirement plans.

Slide 4
Note: CAGR is the compound annual growth rate from 2006-2016. Chart indexed to 2006 levels. Source: Charles Schwab; Yahoo Finance.
1. Schwab Advisor Services Institutional (ASI) assets exclude Retirement Business Services (RBS) assets. Excludes “retail assets” resulting from Schwab
Advisor Network® (SAN) and Advisor Source.
2. 2016 is a preliminary Schwab estimate assuming 2016 RIA market growth was in line with ASI asset growth.
3. Excludes dividend yield.
Metrics Source: 2016 RIA Benchmarking Study from Charles Schwab.
1. Median results for all firms with $250M or more in AUM, unless otherwise noted. 2016 RIA Benchmarking Study from Charles Schwab, fielded January to
March, 2016. Study contains self-reported data from 1,128 firms. Participant firms represent various sizes and business models categorized into 12 peer
groups — 7 wealth manager groups and 5 money manager groups, by AUM size.
2. Organic growth from net asset flows is the change in a firm’s assets from new, existing, and lost clients before investment performance is taken into
account, and it excludes the growth from acquisition or divestitures, and from advisors joining or leaving.

Slide 6
Source: Automated Investing MKT 2015, Charles Schwab.

Slide 7
Chart Source: U.S. RIA Marketplace 2016, Cerulli Associates

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