Schwab Advisor Services plans to charge $5 per client account for certain block orders, effective March 2, a fee that could amount to a significant bite for independent advisors.
The charge appears in the financial giant's pricing guide, updated in January, which recommends that clients consult with their advisors to understand whether the charge will apply to trading activity in their accounts.
Brady Lochte, a fee-only financial advisor who founded Axon Capital Management, which uses Schwab as custodian for client assets, suggested to ThinkAdvisor on Friday that the fee may cause RIAs to make changes.
"The new $5 per account block trade fee primarily affects firms that rebalance across a large number of household accounts at once. Over the course of a year, especially for firms running systematic quarterly rebalances or tax loss harvesting programs, those dollars can add up and require a closer look at trading frequency and portfolio drift thresholds," he said via email.
"This may push myself and other RIAs to be more selective about when we trade, widen rebalance bands, or lean further into cash-flow-based rebalancing to reduce unnecessary transactions," he said. "Firms that rely heavily on direct indexing, highly customized portfolios, or frequent tax management will likely feel the impact more than those using model-based ETF portfolios with lower turnover."
Schwab Advisor Services, which serves RIAs, said in a statement emailed to ThinkAdvisor that it "is committed to meeting the evolving needs of independent advisors, including providing high-quality advanced trading support through our Block Desk that many rely on to serve their end clients effectively."
Schwab's block desk is designed to free up advisors' time, the statement says, explaining that advisors can avoid worrying about market impact on oversized or illiquid orders by letting the block trade team handle orders.
"As block trades have grown more complex and resource intensive, we're investing in our Block Desk team and technology to continue delivering strong execution. To help support these investments, Schwab Advisor Services will implement a $5 charge per client account allocation beginning March 2, 2026," the firm said.
"This competitive fee ensures that we can maintain the sophisticated capabilities our advisor clients expect. As always, advisor clients can choose to execute block trades themselves through digital channels without incurring the Block Desk charge, and we will continue to support them with complimentary education, coaching and hands-on expertise to help them navigate complex trading scenarios with confidence," the statement says.
The charge may be paid either by the advisor or by the advisor's individual investor clients, depending on the agreement they have, a Schwab spokesperson said.
The price guide notes that the $5 fee applies to each account included in certain block order types or when the client or advisor requests special handling from the block desk.
One industry consultant said the move appears to stem from changes in custodian revenue sources.
"A single block trade executed across hundred of accounts can quickly add up, materially increasing costs for model-driven RIAs, TAMPs and asset managers, and why the industry is up in arms about Schwab's aggressive approach," Tim Welsh, president of Nexus Strategy, a wealth management industry consultancy, told ThinkAdvisor by email Friday.
"The fee primarily impacts advisors and their firms operationally, though it may be reflected in client disclosures and trading costs," he said.
"The move appears tied to broader shifts in custodian economics, as lucrative trading commissions are now gone and transactional revenue becoming a smaller portion of total revenue, Schwab is re-pricing higher-touch trading activity and trying to shift fees with execution complexity," he said. "It may also encourage more flow through Schwab's own execution and routing infrastructure, reducing trade-away activity and operational friction."
RIABiz reported the new fee earlier Friday.
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