Charles Schwab is increasing fees for advisors participating in its client-referral program, the Schwab Advisor Network. Effective later this year, all participants will see a 5% increase in program costs.
Schwab signaled potential fee adjustments late last year and has now confirmed the changes.
“After 18 years without modifications to advisor participation fees, there will be a 5% increase over the current fee for each asset tier,” a Schwab spokeswoman states. She did not provide a specific date for implementation.
The referral program’s fee schedule is based on a percentage of the average daily balance of client assets managed by the advisor. Currently, the structure begins at 25 basis points (0.25%) for the first $2 million in assets, decreasing to 0.2% on the next $3 million, 0.15% on the next $5 million, and 0.1% for assets exceeding $10 million.
For many advisors, Schwab’s referral network remains a valuable source of new client relationships. The firm invites prospective clients to request introductions to “select, prescreened independent advisory firms with local offices.”
To qualify for the program, advisory firms must generally oversee at least $250 million in client assets.
Schwab emphasizes that participating firms are vetted based on experience, professional education, and assets under management. The firm notes that the average advisor in the network has 12 years of experience, with many holding credentials such as Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA).
Additionally, Schwab mandates that participating advisors primarily operate under a fee-based compensation model rather than commissions. Advisors must receive compensation for financial-planning and advisory services exclusively through fees.
Firms that market financial-planning services must employ at least two CFPs to be eligible for the referral program.
