Company is attracting wealthier clients with its new pricing model.

“The move to subscription-based financial planning came as a direct result of client feedback about the appeal of this pricing approach, and it’s clear from these early results that we’ve struck a chord,” said Cynthia Loh, Charles Schwab vice president of digital advice and innovation, in a July 11 news release. “Today’s consumers expect simplicity, transparency and value – and how they invest should be no different.”

“We’ve seen many new clients sign up who knew they needed help with financial planning but hadn’t found an advisory model that fit them – either because they prefer a more digital approach, are cost-conscious, or find traditional planning services overly complex,” added Loh. “These investors were managing their investments on their own but not necessarily by choice, so we’re excited to give them a new way to get the help they need.”

Through Schwab Intelligent Portfolios Premium, in exchange for a monthly subscription fee, investors get a combination of automated portfolio management through robo-advisor and unlimited, comprehensive guidance and financial planning from a Certified Financial Planner. Clients can schedule phone or video conferences with the CFP® to get one-on-one advice anytime. This formula seems to work well for clients of varying asset levels with different financial goals, including saving for retirement, buying a home or paying for college.

There are some stipulations, of course. There is a minimum asset level of $25,000 to get started, along with a one-time planning fee of $300. The $25,000 asset minimum can be held across multiple Schwab Intelligent Portfolios Premium accounts. The minimum for each account is $5,000. The planning fee is charged when a subscriber’s first CFP® meeting has been scheduled.

In addition, the ongoing monthly fee is $30 per month, billed quarterly. Subscribers are also responsible for any operating expenses for their exchange-traded funds (EFTs), which they’d pay if they invested on their own anyway. However, ScwhaB Intelligent Portfolio accounts do not charge advisory fees or commissions, except the one-time planning fee.

Clients can manage their accounts online with planning tools that help them achieve their financials, see their progress and test various “what if…” scenarios. The dashboards are available online or through iOS and Android devices.

“The wealth management industry is changing rapidly – consumers are expecting to tailor services to their needs and pay based on consumption,” according to Alois Pirker, research director for Aite Group's Wealth Management practice. “Schwab is at the forefront of this change. The subscription-based pricing they introduced in their digital advisory service lowers the barrier for many consumers that would benefit from financial planning by making it very easy to understand from a service and pricing perspective.”

Insider Take:

Subscribers with a minimum of $25,000 to invest are in it for the long haul, so a program that is easy to understand and that provides online tools and unlimited support for a set fee makes a lot of sense for today’s investor. This is great for investors, who may feel more comfortable with fixed costs. This is particularly true for younger investors, who may be used to subscriptions and prefer a pay-as-you-go model. For Schwab, it is also a good deal, creating consistent income that makes their financial future more secure as well. So far, it looks like Schwab’s calculated gamble has paid off.

Dana Neuts is Subscription Insider's Senior Staff Writer, covering our daily subscription news as well as member features, case studies, and reports.  

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