Charles Schwab Now Offers Investment Advice Digitally via Subscription

Clients pay a one-time fee of $300 and then $90 a quarter.

Subscription News: Charles Schwab Now Offers Investment Advice Digitally via Subscription

Source: Charles Schwab

Last week, Charles Schwab joined the subscription economy, offering investment advice digitally via subscription. The company previously offered this as a fee-based service called Schwab Intelligent Advisory, charging clients an advisory fee of 0.28 percent. The new subscription-based service is called Schwab Intelligent Portfolios Premium, and it builds on the company’s free, more basic 24/7 digital investment service called Schwab Intelligent Portfolios.

Now, rather than paying an advisory fee, Schwab Intelligent Portfolios Premium will pay a one-time initial fee of $300 for planning and a $30 monthly subscription fee, billed quarterly. Using Schwab Intelligent Portfolios Premium requires a minimum investment of $25,000.

In addition to the base services offered, the subscription-based service offers the following:

  • Unlimited one-on-one guidance from a Certified Financial Planner who can provide personalized financial advice based on an investor’s current and future goals. This service allows clients to schedule appointments online to meet via phone or video conference to discuss the client’s financial goals and needs.
  • A comprehensive financial plan and roadmap customized for individual investors to show them how to reach their financial goals
  • Ability to access the plan 24/7 digitally, allowing them to test different scenarios to see how different goals, needs and circumstances might impact their financial plan

“Cost and complexity are two of the biggest roadblocks to accessing financial planning, and our goal is to break down those barriers,” said Cynthia Loh, Charles Schwab vice president of digital advice and innovation, in a March 28 news release. “These changes are a result of client feedback and our commitment to meet consumer expectations for simplicity, transparency and value.”

“Subscription-based pricing is second nature to many of us who pay this way for other forms of ongoing access and guidance – from streaming media services to fitness and personal training memberships. We think people should have the opportunity to pay for financial planning the same way,” added Loh. “This new pricing approach is part of our focus on making the investing and planning experience easier, more modern, and more approachable. We’re looking forward to helping people get the financial help they need, whether they’re investing for the long term or have more immediate life events that require a plan.”

Subscription News: Charles Schwab Now Offers Investment Advice Digitally via Subscription

Source: Charles Schwab

Investors who utilize Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium are still responsible for paying associated operating expenses on exchange-traded funds in their portfolios, whether they are Schwab ETFs or third-party ETFs, but they do not pay commissions.

For investors at the $25,000 level, the fee works out to be pretty similar the first year:

  • Advisory fee as percentage: $25,000 x 0.28% = $700 fee + fees for EFTs
  • Subscription fee: one-time fee $300 +$360 = $660 year 1 + fees for EFTs

Insider Take:

Most investors are in it for the long haul, so a subscription-based program could potentially be lucrative for Schwab. The company will be giving up some fee revenue, of course, but they could potentially make up for it in volume. What we like about this service is that it offers clients options. The free “robo-advice” financial planning advice is still available at a lower minimum ($5,000), but those who want more one-on-one guidance can get it at a lower price point. This may make investing more attractive to those who are new to it or who aren’t sure exactly what type of planning help they need. In exchange, Schwab gets recurring revenue to stabilize its own balance sheet.