Schwab subscription planning service draws $1 billion in new assets

Hybrid robo launched in March charges one-time planning fee plus $30 a month

Jul 11, 2019 @ 2:28 pm

By InvestmentNews

Schwab's subscription-based hybrid robo-adviser has attracted more than $1 billion in new assets since its launch at the end of March, the company said.

Schwab Intelligent Portfolios Premium, which includes unlimited guidance from a certified financial planner and an in-depth financial plan, charges new customers an upfront fee of $300 plus a flat $30 a month. It replaced the company's earlier robo offering, Schwab Intelligent Advisory, which charged 0.28% of assets.

Schwab said that in addition to providing ongoing financial planning, the subscription program gives clients access to their plan and tools online, and a diversified portfolio of exchange-traded funds that are automatically rebalanced.

Clients pay the operating expenses on the ETFs in the portfolios, which include proprietary Schwab ETFs, the company said in a release. Based on a client's risk profile, a portion of their portfolio is placed in an FDIC-insured deposit account at Schwab Bank.

(More: The robo-advice market is growing, but changing)

At the time of the program's launch, industry observers said the move away from asset-based fees by an industry powerhouse marked a watershed.

"We're going to look back at this day and say it was a monumental change in our business," said Gavin Spitzner, who heads Wealth Consulting Partners, an industry consulting firm. He compared the impact to that of May Day 1975, when the deregulation of broker commissions set the stage for the creation of discount brokerages like Schwab.

(More: RIAs see new competition from Schwab subscription pricing)


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