If you’re part of Schwab’s Advisor Network, $5 million is the new $500,000.

I’ve been receiving calls from our advisors since Schwab’s big announcement last week.  They are thinking about the shift in SAN’s minimum, which started around $500,000, has moved to $2 million earlier this year, and now Schwab plans to raise it to $5 million, ⁠according to Citywire.

Schwab says more than half of SAN’s net flows already come from clients with more than $10 million in investable assets. If that’s where the program is producing growth, concentrating there makes sense.

Now, RIAs have to think about what happens below $5 million.

There are millions of American households with $500,000, $1 million, $2 million or $4 million in investable assets. Many have complicated financial lives and real reasons to seek professional advice. And there are thousands of excellent advisors built to serve them.

SAN had nearly 300 RIA members in 2020. Today, it has about 140. I don’t know how much the new minimum will change that number, but the direction gives RIAs a reason to look carefully at where their growth comes from.

The people below $5 million didn’t disappear

To put this in perspective, we analyzed more than 10,000 Datalign customers across four wealth groups. Across that group, we found plenty of people with substantial financial experience who had never worked with an advisor. They had saved, invested, bought homes and accumulated meaningful assets on their own. Then they encountered something they hadn’t had to solve before: thirty years of saving for retirement became figuring out how to live on those savings; company stock that helped create wealth became a concentration problem; accounts accumulated across a career suddenly had to work together.

Those numbers interest me because they show how much potential demand for advice exists outside the highest wealth tiers.

The situations behind them matter even more.

Someone may have spent 20 years accumulating money across a 401(k), IRA and brokerage account without ever turning those accounts into a financial plan. Retirement may suddenly put distributions, RMDs and Roth conversions on the table. Equity compensation may have grown into a concentrated position. A person may already have an advisor and start questioning whether that relationship still fits.

None of those problems begins at an arbitrary AUM threshold.

RIAs need more than one answer to the growth question

SAN will remain a valuable source of new clients for firms that fit its criteria. Schwab gets to decide those criteria, and it has every reason to allocate its resources toward the clients it wants the program to serve.

An RIA has a different responsibility: build a growth plan for the clients the firm wants to serve.

That means knowing where those people come from, what causes them to start looking for help and how many sources of new relationships the firm can rely on. It also means understanding what happens when a custodian, publisher, search engine, referral program or other third party changes its economics or rules.

Datalign has ⁠connected more than 100,000 consumers with financial advisors and works with more than 13,000 fiduciary advisors. We work with people across the asset ranges affected by Schwab’s decision.

I believe every American deserves access to trusted financial advice. That requires great advisors. It also requires reliable ways for people who need those advisors to find them.

For RIAs, the SAN news provides a useful reason to ask a question that matters regardless of what Schwab does next: where will your next 100 clients come from?