A Decade That Reshaped Wealth Management:

Downward pressure on advisor fees + The rise of subscription pricing for financial advice

Trends Intro Paragraph

Before drawing the curtain on the past decade, let’s look back on the past 10 years and reflect on the many momentous developments in the financial services and wealth management industry. Perhaps the most significant 10-year span the industry has seen, advancements were led by technological capabilities and competitive pricing reductions. With a new year and new decade off and running, we asked leaders at Schwab to offer their perspectives on the most significant changes in the past 10 years and their impacts on investors.

Trend 3: Walt


Plummeting OERs, $0 trade commissions and downward pressure on advisory fees

All across our industry, fees are falling, from the operating expense ratios on mutual funds and exchange-traded funds, to advisory fees and trading commissions. Today, it’s not difficult to find an investment firm that charges nothing to trade a stock or ETF, and we’re proud to be one of those companies. A combination of healthy competition and the advent of expense-saving technology together have fueled a revolution in the pricing of investment services over the past few years. Of course, this is great news for investors. What’s more, amidst all the uncertainty that comes with investing, managing its associated costs is one of few levers investors can pull to influence their success.

Wealth Management Trend: Walt Quote

"Ever since our debut as a discount broker back in 1975, we’ve fought hard against price as a barrier to investing, so that benefits of participating in our markets are available to anyone, whether an experienced investor or someone just starting on the investing path. When it comes to investing, price really does matter. "

Walt Bettinger, Chief Executive Officer, Charles Schwab 
Walt Bettinger, Chief Executive Officer, Charles Schwab

Trend 4: Cynthia


The Netflix effect - subscription pricing for financial advice and support

The subscriptions e-commerce market grew rapidly during the decade. A 2018 McKinsey report revealed that 15 percent of online shoppers subscribe to e-commerce services like Amazon Subscribe & Save and Dollar Shave Club, and 46 percent of those surveyed subscribe to an online streaming-media service like Netflix. Toward the end of the decade, the financial services industry also embraced the trend. In 2019, Schwab moved to a subscription pricing model for its digital investing and financial planning service, Schwab Intelligent Portfolios Premium.

Cynthia quote

"Subscription pricing helps deliver on the simplicity, transparency and value that today’s investors expect from their wealth manager and every other part of their life. We made the move as a direct result of client feedback, and it struck a chord: within a few months of the new pricing, Schwab Intelligent Portfolios Premium added $1 billion in new assets under management."

Cynthia Loh, Vice President of Digital Advice and Innovation, Charles Schwab & Co.
Cynthia Loh, Vice President of Digital Advice and Innovation, Charles Schwab & Co.

Part 2 of a series