The Trading Strategy Tax: Why Your Investment Approach Now Has a Price Tag

John O’Connell was recently published in PowerAdvice on how Schwab’s new $5 Block Desk fee puts a price tag on your trading strategy. His point is that the fee looks trivial in isolation but multiplies across accounts, securities per model, and trading frequency, so a $1B active rebalancer can face roughly $450,000 a year, about 6% of gross revenue. His deeper insight is that custody used to hide a cross-subsidy, with passive and direct-indexing clients paying the same rate while generating very different execution costs, and this fee just moved that cost from Schwab’s income statement to yours. He also flags a fiduciary trap: the fee-free alternative routes through payment-for-order-flow, so best-execution policies must document that the channel choice serves the client, not just dodges a visible charge.