Schwab, which rivals Robinhood in routing retail orders using the payment for order flow (PFOF) model in the US, has changed its pricing model for retail advisers, likely increasing its payment for order flow revenues.
Robinhood and Schwab sit at opposite ends of the communications spectrum around these revenues. Robinhood has long foregrounded PFOF as a core earnings line, embedded in “transaction-based revenue” in all its investor presentation. Schwab never uses the PFOF acronym in presentations, with the economics more typically referenced as “order flow revenue” only detailed within SEC filings. Order flow revenues represent 8% of Schwab’s revenue in Q4 2025, Robinhood sees 60% of revenues from order flow. Looking only at Options and equity transactions-based revenues in Q4 2025, these were 31% of Robinhood total revenues.
Read more: “Robinhood, Schwab took in US$281m of cash-equity PFOF in Q4 2025”.
Smaller independent Registered investment advisors (RIAs) are fiduciaries who typically manage retail client portfolios and trade on behalf of end-investors. Schwab is the dominant platform for independent RIAs; SEC data show 21,669 investment advisers operated in 2024. Schwab has said it serves around 16,000 RIA firms, with US$5.2tn of RIA assets in custody at the end of 2025.
RIAs often use a single trade to service many clients. This is done by allocating a single portfolio trade across many underlying client accounts.
Schwab updated its adviser trading charges and the new fees will go live in Match 2026, as noted in its pricing schedule which change the costs for RIAs to execute trades. Schwab’s published pricing includes a US$5 charge per client-account allocation on certain complex orders when RIAs request advanced execution support from its Block Desk. Market participants also point to step-in and done-away charges, when a RIA wants to trade with external brokers to Schwab, that can reach US$25 per sub-account allocation.
Brokers servicing RIAs, who spoke to Global Trading on condition of anonymity, said that once an order must be split across hundreds of end-accounts, per-sub-account charges can outweigh underlying execution costs, making low-touch digital execution the only scalable economic option for RIAs. Low-touch digital execution automatically drives charges down the payment for order flow channel, for which Schwab receives incentive payments.
Global Trading put that incentive question to Schwab.
A spokesperson for the firm said: “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 be implementing a $5 charge per client account allocation on complex orders when RIAs request advanced execution services offered by our Block Desk team.”
Schwab added, “[Advisers] can choose to execute block trades themselves through digital channels without incurring the Block Desk charge” and that the charge “is unrelated to payment for order flow.”
Global Trading then asked follow-up questions on how low-touch adviser routing is categorised in Schwab’s reporting, and whether per-sub-account fees alter what RIAs can do in practice when allocations span many underlying accounts. Schwab declined to provide further comments or to say if these could go towards their slowing cash equity order flow revenue engine.
