Schwab raised tax-aware long-short minimum to $10M from $1M

Schwab raised the minimum for its tax-aware long-short accounts to $10 million from $1 million last month, after introducing limits earlier this year on how much of an RIA's assets could be allocated to those accounts, InvestmentNews reported.

The strategies remain a large piece of Schwab's securities-based lending book. Of the $187.9 billion in client margin loans outstanding at the end of September, $60.7 billion was tied to long-short strategies used by RIAs. Average margin loans linked to the strategies came to $51.4 billion in the quarter, against $2.8 billion a year earlier, and Schwab cited the strategies as one reason net interest revenue rose 14%. The firm reported record quarterly revenue of $7.2 billion, up 17% year over year.

On Thursday's earnings call, CEO Rick Wurster said the program grew faster than Schwab expected because a large competitor had less capacity to support it. It "was important to us to throttle growth for a period of time," he said. He framed the throttling as narrow next to the custody franchise: "We offer so much more than just long-short, which is why we are the preferred custodian for most RIAs in the industry."

The custody numbers support that framing. Advisor Services took in $120.1 billion in net new assets in the third quarter, up 47% from a year earlier, and ended September with $5.85 trillion in client assets, up 17% and nearly 44% of Schwab's $13.33 trillion total. The advisor unit brought in more new money than the retail arm, Investor Services, which added $72.3 billion.

By platform asset size, firms with more than $5 billion on Schwab accounted for 36% of Advisor Services net new assets; firms with $1 billion to $5 billion contributed 22%; those with $100 million to $1 billion supplied 30%; and practices under $100 million made up 13%. Wurster said Schwab serves more than 16,000 RIAs, and that 1,101 advisory firms added it as a custodian in 2025 as verified in Form ADV filings. Its next four competitors, unnamed in the earnings presentation, added between 79 and 349 firms each, according to Schwab.

For an advisor, the two changes are sizing constraints rather than a closed door. The new minimum is ten times the old entry point, so a taxable client account has to be larger before the long-short pairing is available at all; the allocation cap separately limits how much of a book can sit in the accounts that produced the $60.7 billion margin loan figure. Both push the strategy toward bigger households and away from broad use across a book.

The coverage describes the throttle as lasting "for a period of time" and does not say what would end it.