Schwab bumps up fee for RIAs using its referral service

Schwab bumps up fee for RIAs using its referral service
Schwab's referral program has not changed its fees in almost 20 years.
FEB 12, 2025

After almost two decades of no change in pricing, as well as incredible growth in the financial advice industry, registered investment advisors that get valuable referrals from the Charles Schwab Corp. will pay more for that client information.

Called the Schwab Advisor Network, the referral program has not changed its fees in almost 20 years, according to the company. Now, RIAs later this year will face an increase of 5 percent. 

That means Schwab will charge a shade more than 26 basis points on the first $2 million in client assets. The fee is significant; an industry rule of thumb is for advisors to charge roughly 1 percent – 100 basis points – on client assets.

“As we have shared with advisors in the Schwab Advisor Network program, after 18 years with no changes to the advisor participation fees, there will be an increase of 5 percent over the current fee for each asset tier,” a spokesperson from Schwab wrote in an email. “These changes are planned to go into effect later this year.”

InvestmentNews in November reported that Schwab was mulling over the possibility of bumping up fees for the program.

RIAs who want to work in Schwab’s referral program should have at least $250 million in assets under management when starting with the service. The fee advisors currently pay to Schwab is 25 basis points, or 0.25 percent, on the first $2 million of client assets. The percentage decreases after that for larger accounts.

In November, one financial advisor raised the question of who was going to pony up for the fee increase: The financial advisor, or the investor that just bought an RIA? Regardless, getting referrals from Schwab will be more expensive for RIAs in the program.

“You're the CEO of a private equity-backed agglomerate of RIAs whose principle source of net new account growth is paying fees to Schwab's referral program to rent access to their clients,” wrote Josh Brown, CEO of Ritholtz Wealth Management, in a post on LinkedIn. “And then this hits.”

“What do you tell your advisors?” he asked. “What do tell your equity shareholders? The basis points are going to have to come from somewhere... Who's giving them up?”

It’s not clear how much annual revenue Schwab generates from its Schwab Advisor Network referral program.

But the program is undoubtedly significant for some RIAs. Peter Mallouk’s firm, Creative Planning, with $325 billion in client assets, receives client referrals from Schwab through the program, according to its Form ADV. Creative Planning also uses other client referral programs.

After a client reaches $2 million in assets, the percentage amount Schwab currently charges decrease: 20 basis points on the next $3 million, 15 basis points on the next $5 million and 10 basis points for amounts over $10 million.

RIAs that use Schwab as a custodian get the referrals from Schwab’s network of retail branch offices. The fee to advisors is not a one-time transaction but rather charged in perpetuity.

About 140 RIAs use the Schwab referral program.

Latest News

More workers dipped into their retirement savings last year, Vanguard finds
More workers dipped into their retirement savings last year, Vanguard finds

Sneak peek into annual defined contribution plan report shows average participant balances reached an all-time high amid rising equity markets.

Decades-old will leaves fate of late actor Gene Hackman's $80M fortune uncertain
Decades-old will leaves fate of late actor Gene Hackman's $80M fortune uncertain

The iconic actor's death alongside his wife, Betsy Arakawa, leaves pressing questions about what happens next to his assets.

Fallen tech stocks fail to entice wary investors
Fallen tech stocks fail to entice wary investors

Big tech firms like Alphabet and Amazon are trading at bargain valuations, but a risk-averse market has meant no one's biting.

Social Security Administration sets record straight on dead people getting beneifts
Social Security Administration sets record straight on dead people getting beneifts

Of millions of deaths reported yearly, just a fraction of a percent are "erroneously reported" cases that need to be corrected, the agency said.

Trillions wiped off equities but don't worry, it’s 'healthy' says Bessent
Trillions wiped off equities but don't worry, it’s 'healthy' says Bessent

US Treasury secretary says that markets will 'do great' over longer term.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies