Schwab tests its pricing power on HNW clients

Charles Schwab published a fee schedule Wednesday raising marginal rates for the two highest tiers served by Schwab Wealth Advisory, its internal advice channel, on accounts between $5 million and $25 million effective Jan. 1, Financial Planning reported.

Starting then, clients with $10 million to $25 million will pay a marginal rate of 0.45%, up from 0.30%, and clients with $5 million to $10 million move to 0.55% from 0.50%. The schedule does not touch investors with $5 million or less: the rate on accounts up to $1 million stays at 0.8%, and the quarterly minimum attached to the lower end of that group goes away in the fourth quarter.

Fifteen basis points is not the kind of number that forces a client to rework a household budget, but Schwab's willingness to move is. Tim Welsh, founder of Nexus Strategies, told Financial Planning that the firm underpriced high-net-worth advice for so long that it can raise rates and still undercut everyone else. "They're still cheaper than everybody else," he said.

Industry analysts cited by Financial Planning see the change as part of a broader tilt: Schwab is competing more directly with RIAs for the same clients while protecting revenue. The tilt was visible before this fee schedule: PWD has reported that Schwab is ending sub-$5-million referrals to its Advisor Network in 2027 and that it plans 30 Schwab Wealth Advisory offices by 2027. A custodian that keeps smaller referrals, opens advice branches and raises rates on its top tier is no longer a utility; it is a competitor with a price list.

The fee schedule arrives alongside a consolidation. Schwab is folding separately managed accounts formerly housed under names such as Managed Account Select, Managed Account Connection and Schwab Managed Portfolios into Schwab Wealth Advisory, a move Schwab says is intended to provide "a more consistent and transparent experience." In practice, that means one price list for what used to be several products.

The new pricing applies only to clients who enter Schwab Wealth Advisory on or after Oct. 1; Schwab says the majority of existing clients will see no change in overall fees and that some could see fees decline through asset aggregation. That timing separates the announcement from its revenue impact: the schedule starts with new business, not with the existing book.

For an independent advisor, the positioning matters more than the rate. Schwab spent years as the low-cost answer for breakaway advisors, and it still sets the entry point for many wealthy clients. With this schedule, it is telling the market that even its own price list has room to move at the top. That is an invitation for every RIA with a $10 million relationship to look at what its own fee schedule says about the value of the planning work attached to that account.

None of this requires a defensive call to clients today, but it is a client-conversation cue: the custodian has provided a number — 0.45% — that will sit in the market before most clients ask about it. The advisor who can show what sits on top of that number has a concrete frame for a conversation that used to be abstract. The platform holding client assets sets the outer limit on what a practice can deliver; here Schwab is setting a lower bound, and its new lower bound is higher than the old one.

For advisors, the schedule is more reference point than emergency. Existing clients are mostly protected, and no one is asking an independent firm to defend a Schwab increase. When a prospective client next asks why an independent relationship costs more than a custodial one, the answer no longer has to start with abstractions; it can start with a fact: Schwab charges 45 basis points on the marginal dollar in a $10 million account, and everything beyond that number is what the advisor actually does.