Charles Schwab unveiled its anticipated hybrid advisory service, Schwab Intelligent Advisory, on Tuesday.
Investors seeking both human and digital advice can sign up for the service, which charges an annual fee of 0.28% to manage at least $25,000 of assets (including a quarterly maximum fee of $900). For the fee, investors will receive a specific financial plan, ongoing advice and input from veteran planning consultants, as well as an automated portfolio.
The rollout comes six weeks after robo-advisor Betterment launched its own hybrid offerings.
“Robo-advisors are now upping their game by providing access to financial advisors in addition to their firm’s automated investment offerings. That [hybrid offering] is a potent combination and a competitive challenge for advisors,” said executive recruiter Mark Elzweig, in an interview.
Others see it as a direct threat – and even a conflict of interest.
“If this new platform is touting [Schwab's] own CFPs, then this program has huge potential for conflict of interest with the independent RIAs networked with Schwab,” said recruiter Jon Henschen, in an interview.
The firm says its new hybrid offering relies on Planning Consultants, who are Schwab employees “based in our service centers dedicated to Schwab Intelligent Advisory,” according to a spokesperson.
“Schwab has sent advertisements to independent RIAs’ clients in the past which caused a big backlash, so that could now likely recur if clients of independent RIAs are being notified of the new Schwab Intelligent Advisory,” Henschen explained.
The firm, though, says it has no plans to contact advisors’ clients about the new hybrid rollout.
To the recruiter, however, Schwab’s latest move is essentially sending the message: “Leave your advisor and use our advisor, and we’ll be substantially cheaper,” Henschen said.
“Programs like this will only add to the price compression on advisory business in our industry,” the recruiter added.
The firm, naturally, disagrees and argues that the service is not aimed at typical RIA clients.
“Schwab Intelligent Advisory is designed for an investor who is digital-first, wants to maintain control of their investing and receive more episodic advice, and does not have a highly complex financial situation – a different type of investor than what most independent advisory firms serve today,” it said in a statement.
Not An Either/Or
For his part, Elzweig isn’t convinced the situation is as grave as Henschen sees it.