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Schwab Launches Free Financial Planning Tool

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Schwab sign photo taken by Bloomberg (Photo: Bloomberg)

As it moves to wrap up its purchase of ex-rival TD Ameritrade, Charles Schwab says it is now offering free digital financial plans to help investors move toward their retirement goals. 

All clients can use the self-guided tool, Schwab Plan, which the firm argues makes it “the only large retail brokerage to offer complimentary financial planning to all clients.” 

For both clients and all investors, Schwab also launched an online financial planning hub with goals-based calculators, related tools and educational resources, such as a mortgage calculator. 

“It’s a brilliant move,” said Gavin Spitzner, head of Wealth Consulting Partners. “Schwab sees what Vanguard’s doing [by] pushing into the digital space much more with planning, and it’s trying to stay one step ahead. They are putting the hammer down and playing for keeps.”

The latest Schwab effort comes less than a year after it introduced free-commission stock trades, “which helped them take out TD,” Spitzner explained.

These developments followed its rollout of “subscription pricing and brought down the fee on human advice, albeit delivered virtually, to $30 bucks a month including asset management,” the consultant said.

This program  Schwab Intelligent Portfolio Premium, which charges $300 for the initial financial planning work  ”doesn’t get enough attention,” he added.

“Now they’re giving away planning for free to every single client,” Spitzner said of Thursday’s news. “They are commoditizing planning.”

As for how Schwab’s RIA clients might react to the news, “There will be a divided response,” he explained. “Advisors who understand the real value they provide and are, say, more specialized in terms of the markets they serve by going much deeper [with their planning services], they’re fine.”

Details on the New Tools

For Schwab Plan, clients answer a few questions and in about “15 minutes, they’re able to generate a retirement plan that shows retirement goals and [the] probability of funding those goals, a comparison of current asset allocation to a recommended allocation … and suggested next steps to get and stay on track,” according to Chief Digital Officer Neesha Hathi.

The new tool also can “aggregate and factor in accounts held outside of Schwab,” Hathi said in a statement

Acknowledging that these moves creep into the field of RIAs that Schwab serves, the exec explained: “We recognize that technology doesn’t replace the power of trusted human relationships and connection. At times, investors may want to consult with a financial advisor.”

Clients and other investors with “more complex needs and [a] preference for working with a person can work with a financial consultant or a Certified Financial Planner professional,” she added. Schwab provides access to professionals “24/7 via phone, email, or chat to help with service or general questions.”

The brokerage firm also says its new Schwab Plan includes an interactive planning dashboard, tools and analytics that look at the probability of reaching goals, as well as Monte Carlo simulations and plan updates.

“We believe everyone, regardless of how much money they have, should have access to tools that help them take control of their financial future,” said Cynthia Loh, vice president of digital advice. 

The firm’s goal in launching Schwab Plan is to “provide investors with a modern planning tool that is similar to what professionals use, but streamlined to make the experience easier and more accessible for people who want to get started planning on their own,” Loh explained.

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