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Mentor RIA Consulting

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Considering Schwab’s New Advisory Subscription

Posted on April 24, 2019 at 8:54 AM
Schwab recently announced a new offering for investors – a subscription plan which includes both investment management and financial planning. After an initial setup fee of $300, the charge is a fixed $30 monthly. The fee includes “unlimited” access to certified financial planners. When compared to the fee structure used by most investment advisers, this is an offering that could cost investors much, much less than they pay to an adviser who charges a percentage of assets under management.
Much has been said about how this may affect the financial industry and, in particular, investment advisory firms. Investors who are not interested in building a deep relationship with one adviser but wish to have access to services on demand will find this approach attractive. Those who are price conscious will also see a lot to like with the subscription service. However, these are almost certainly the very same clients that serious investment advisers would not be seeking to serve with their businesses. The mass affluent as a group can generate substantial fees for their service providers but the business model used by many investment advisers render these investors unattractive on the basis of fee versus time and effort spent on services.
The consensus among advisers seems to be that to differentiate themselves – and their fees – from the Schwab offering, the best course is to clearly communicate their value to their clients. Certainly, the personal relationship most advisers establish with their clients differs from the availability of a remote planner who may not be the same person each time a client seeks an update or advice.  What do you think – and what might your approach to this be?

Categories: Planning, RIA Business

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