They’ve gone and done it again.

Starting next year, Charles Schwab, the largest custodian for independent advisors in the US, intends to raise the minimum asset level for clients eligible for referral to its Schwab Advisor Network to $5 million, up from the current threshold of just $2 million. The network, which connects investors seeking independent financial advice with pre-screened providers, “has evolved significantly since its launch more than 20 years ago, and this change reflects where the program is already headed,” a company representative said. More than half of SAN’s net flows come from clients with at least $10 million, the representative added.

It’s the second hike this year. In January, Schwab raised the minimum from $500,000 to $2 million, following more than two decades without a change. Schwab appears to be making SAN more exclusive, frustrating advisors who rely on it to build their client bases. “Many firms have built their entire growth engines on top of those referrals, and Schwab looks to be actively shrinking the program,” said Tim Welsh, founder of wealth management consultant Nexus Strategy.

Ch-ch-ch-ch-Changes

Schwab maintains it’s still committed to independent advisors. But that message gets murkier alongside Schwab’s push to expand its own workforce. The firm took out a full-page ad in The Wall Street Journal this month stating that it intends to hire thousands of new financial consultants. “They haven’t said it in so many words, but the implication is: ‘Anything under $5 million is ours,’” Welsh said. Still, Schwab remains a custodian advisors want to work with. “Their scope and scale are just staggering,” he said.

Other recent SAN changes include:

• Schwab doubled the minimum assets for firms participating in the program from $250 million to $500 million earlier this year.
• In 2025, Schwab raised the ongoing asset-based fee by 5%, to rates ranging from about 26 basis points on the first $2 million to 10.5 basis points above $10 million.

You Know Where You Are? The changes are unlikely to prompt advisors to change custodians, Welsh said. “It’s such a hard and disruptive process, particularly if you’re a $1 billion firm with a lot of clients,” he said. But RIAs could begin looking elsewhere for new-client referrals. “Everyone else is going to step into the business to offer referrals and it won’t just be custodians,” Welsh said. “They’ll create this whole new category for referrals, and that’s a good thing.”

Others believe Schwab’s moves were inevitable and that advisors should have developed their own brands and prospect pipelines. “RIAs who have been spoon-fed referrals over the years may now be forced to spend more on marketing,” said Edward Mahaffy, founder of ClientFirst Wealth, Legacy & Estate Planning. “Welcome to the jungle.”