Pedestrians pass in front of a Charles Schwab Corp. office building in New York. (Photo: Victor J. Blue/Bloomberg)
With its announcement of a new flat-fee subscription pricing model for a premium digital advisory service, Schwab once again stands out as an innovator and disruptor in the retail investment space, one that others may follow.
"Schwab Introduced discount brokerage when there were fixed commission rates in mid-'70s, then shifted discount platform to serve retail-based RIAs and now is going direct to consumer another way to capture clients," says Mark Tibergien, CEO of Pershing Advisor Solutions.
Under its new pricing model, Schwab Intelligent Portfolios Premium — formerly known as Schwab Intelligent Advisory — will charge a flat $30 monthly fee after a one-time $300 fee instead of 0.28% of assets, starting April 1. (Current account holders won't have to pay the $300.) The account minimum remains the same, at $25,000, as do the investments, which are a mixture of 53 ETFs from Schwab and other asset managers, and subscribers will receive a comprehensive financial plan with a customized roadmap and unlimited one-to-one guidance from a CFP professional.
The change "is important because Schwab is a significant retail brand," says Tibergien, noting that the firm also has the capital to advertise and market the repriced service.
