Schwab lifts its referral floor to $5M, and referral-fed RIAs get a dated model

Charles Schwab plans to require that clients hold at least $5 million in investable assets before it refers them to RIAs in the Schwab Advisor Network, a change set to take effect on Jan. 5 that more than doubles the current $2 million minimum ^[1]. It is the second increase this year: the floor was $500,000 at the start of 2025 ^[2], which means the qualifying bar has risen roughly tenfold in twelve months ^[3] and 2.5 times in this move alone ^[4].

The mechanics of the arrangement explain why the number keeps moving. Nearly 150 RIAs belong to the network and receive referrals of Schwab clients who want more advanced planning than Schwab's own advisors provide; in exchange Schwab gets custody of the assets plus a fee calculated as a percentage of the member firm's assets under management ^[5]. That was the original trade, pitched as revenue for Schwab and clients for advisors ^[6]. Schwab has also raised the fees it charges network advisors and said it is using AI to let its in-house advisors serve more clients holding under $1 million ^[7]. Read together, those two moves push Schwab up and down the wealth band at once, and a series of recent policy changes has begun to raise concerns that the firm is more intent on competing with its RIA partners than feeding them ^[8].

Schwab's own framing is that the program has moved upmarket on its own. The company said more than half of clients referred through the network have $10 million or more in assets, and that raising the minimum to $5 million "aligns the program with where it is seeing the strongest growth and how clients are engaging with it today," adding that it remains "deeply committed" to the independent advisor community and will keep investing in the network ^[9].

Tim Welsh of Nexus Strategies, who worked at Schwab from 1999 to 2006, reads it as a revenue decision: "They're saying: We need investment management revenues, basis points. So the first order of business is: Stop giving it to advisors. And that's why they're cranking these minimums up" ^[10]. Part of the pressure is coming from the cash side of the business. Schwab and peers earn billions moving clients' uninvested cash to banks that lend it out at relatively high rates, and analysts on recent earnings calls have raised the possibility that technology could erode that stream ^[11].

The advice from consultants is less about lead generation than about identity. Welsh and William Trout, director of securities and investments at Datos Insights, suggest advisors examine how tightly their brand is fused to Schwab's and put some distance there if clients think of Schwab as the primary relationship; build organic growth through accountants, estate planners and insurance specialists; partner with firms that have their own referral networks or custody capability; and concentrate on work Schwab's in-house advisors cannot easily match, such as tax planning, access to alternative assets and multigenerational planning ^[12].

That last item is the real test. A firm whose pipeline was a Schwab hand-off has to build a reason for a $5 million household to pick it directly ^[1][5].