Investing and financial planning company Charles Schwab is moving from its current payment model to a subscription-based one that will provide more hands-on assistance, according to a report by Bloomberg.
The company, which handles $3.5 trillion in assets, is hoping the switch will attract customers who are used to paying for services like Netflix every month and who are comfortable with subscription models as methods of payment.
“We are making this change on behalf of our clients to be simpler and more transparent, but we’re also paying attention to the broader landscape,’’ said Cynthia Loh, vice president of digital advice at San Francisco-based Schwab. “Customers are used to engaging with subscription services.’’
The new plan — previously called Schwab Intelligent Advisory — will be renamed Schwab Intelligent Portfolios Premium, and it includes guidance from a financial planner and a plan for finances. The old plan used to cost .28 percent of assets. The new one will cost an upfront fee of $300 and a flat fee of $30 a month.
Customers currently using the service won’t have to pay the upfront fee, but they’ll be transitioned into the new pricing model. However, they’ll only be moved if they have enough in assets to make it cheaper for them, which would be around at around the $125,000 mark.
There’s also a free version called Schwab Intelligent Portfolios, which will automatically build and rebalance exchange-traded fund portfolios.
“There aren’t many firms that have tens of millions of customers,” said Devin Ryan, an analyst with JMP Securities LLC. “That being said, for certain parts of the industry that are maybe tech-driven, incredibly scalable and could potential service millions of people, absolutely I could see there being value to a subscription model.’’
Tech companies have increasingly gravitated toward subscription models, with Amazon, Netflix and Apple being notable examples. Companies with millions of users can see significant revenue from the model. Schwab has about 300,000 accounts and $37 billion across all of its digital offerings.