Schwab Overhauls Services to Smaller Investors

Charles Schwab Corp. said Tuesday that it would overhauling its services to individual investors to win more business from customers with $100,000 to $1 million in assets.

“There is a glaring blind spot in serving that group,” Chief Executive David Pottruck said at a briefing in New York. “Investors will have the ability to pay for the services they want and won’t have to pay for the things they don’t want.”

The new structure is San Francisco-based Schwab’s effort to lure clients who may be too small for competitors such as Merrill Lynch & Co. and can’t get the advice they want from brokers such as Ameritrade Holdings Corp.

Schwab’s revenue was unchanged in 2003 even as stocks had their first gain in four years and its number of active accounts dropped.

By giving more choices, Schwab aims to generate higher fees from existing clients by charging individuals who want advice and research, said Erick Maronak, director of research at Victory Newbridge, which has about $60 billion under management and sold its Schwab shares about two years ago.

Schwab’s stock gained 9% last year, while Merrill’s gained 55% and Ameritrade’s more than doubled. Schwab fell 9 cents Tuesday to $12.33 on the New York Stock Exchange.

Schwab, which pioneered low-cost trading more than 30 years ago, now wants a bigger share of about $6 trillion in assets held by U.S. investors with $100,000 to $1 million in assets.

Merrill, the biggest brokerage firm in the U.S., has steered its business to those with at least $1 million and now directs clients with less than that to telephone and Internet-based advisory centers. Customers with less than $50,000 in assets at Schwab or who make fewer than eight trades a year will pay $30 a quarter.

Those who want additional access to Schwab’s stock ratings and other research sources, as well as more detailed reporting, will be charged fees as high as $70 a quarter if they have less than $50,000 or make fewer than 24 trades in a year.

Clients who want more advice get three offerings with fees that start at $125 a quarter and increase based on how much advice and personal service the customers want.