Thread by @MichaelKitces

Woa. BIG industry news! Schwab hiring former TDA Institutional pioneer Tom Bradley to lead its "Core" <$100M AUM segment.

Should be a big relief for small RIAs fearing Schwab will abandon them. (Unclear how far below $100M Schwab will go, though?)
bwnews.pr/38f1Fdu

For "smaller" (<$100M) RIAs that have been fearful that Schwab would shut the door on them after the #Schwabitrade merger closed, this should be a huge relief. Schwab isn't hiring @TomBradley_USA to abandon small RIAs. It's hiring Bradley to build with small RIAs.

Strategically, this makes a lot of sense for Schwab. One thing Schwab has always consistently done is use its size and scale to push downmarket and expand access. And so with the new #Schwabitrade pushing $2.5B of RIA assets, going 'downmarket' to small RIAs isn't surprising.

Of course, there are a LOT of smaller RIAs at TD Ameritrade today specifically because they got rejected by Schwab's AUM minimums in the past. Which left a bad taste in a lot of mouths. That won't instantly vanish just because Schwab says "Ok, NOW we'll work with you!"

On the other hand, hiring Tom Bradley in particular is a real coup for Schwab, specifically in the #Schwabitrade context. In part because Bradley incredibly successful building & scaling w/ smaller RIAs - as TDA built with Schwab (and Fidelity) small-AUM 'rejects' for years.

In addition, Tom Bradley was an incredibly popular RIA leader at TDA. So for long-standing TDA RIAs who joined TDA in the Tom Bradley years (pre-2012), who are nervous about #Schwabitrade, now it feels like they're "coming home" to Bradley again.

From broader industry perspective, Schwab going "downmarket" puts more pressure on small-RIA competitors like SSG & TradePMR to differentiate. Also real pressure on Fidelity to get better w/ small RIAs, or risk losing next generation of RIA startups (small today, big someday!?).

On the other hand, Schwab's commitment to a new "Core" segment of <$100M RIAs under Tom Bradley still leaves one core question: how low, exactly, is Schwab willing to go (in required AUM)?

After all, <$100M AUM firms could already get onto Schwab. They just had to have at least $50M or $20M (depending on the year and the minimums). Word on the street is Schwab is dropping minimums all the way to $0M. Will they really hold to that?

There's also the question of what (likely-reduced) service Schwab will provide to those <$100M RIAs. But to be fair, Schwab/Fidelity/TDA already have tiered service teams w/ less for small firms & more for larger. And Bradley has experience in doing this well?

The bottom line, though, is that Schwab's hire of @TomBradley_USA is a big deal, not just for his experience to build/scale w/ <$100M RIAs, but also strategically to soothe the nerves of TDA RIAs. What a monster win for Schwab.

Now we just have to wait to see execution? :)