Charles Schwab Corp. is raising the fees registered investment advisors (RIAs) pay to participate in its Schwab Advisor Network, a referral program that connects advisors with potential clients. According to InvestmentNews, for the first time in nearly 20 years, Schwab will increase fees by 5 percent later this year.

Currently, RIAs in the program pay 25 basis points (0.25 percent) on the first $2 million in client assets, with decreasing percentages for higher asset amounts. With the fee hike, advisors will now pay just over 26 basis points on the first $2 million. Given that many advisors charge clients around 100 basis points (1 percent) on assets under management, this increase represents a meaningful cost for participating RIAs.

InvestmentNews reports that Schwab has not disclosed how much revenue the referral program generates, but it remains a critical pipeline for many firms. For example, Creative Planning, which manages $325 billion in client assets, participates in Schwab's referral network alongside other client acquisition programs.

To join the Schwab Advisor Network, RIAs must have at least $250 million in assets under management. Advisors receive referrals from Schwab's retail branch network but pay the referral fee indefinitely rather than as a one-time transaction.

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