Schwab announced it would begin offering investment advice, either in person or over the phone, through its Portfolio Consultation service. For $400, a Schwab investment specialist will analyze an individual's current portfolio, compare it with a model asset-allocation plan, and then recommend specific investments.

The consultation "is the highest level of portfolio advice Schwab has ever offered to its retail customers," said Edward Rodden, a Schwab senior vice president.

The move allows Schwab to broaden its investment services beyond the Internet while keeping Schwab.com front and center. For example, once an investor's portfolio has been overhauled, Schwab will then try to educate the client on how to monitor and update the portfolios on his or her own by using Schwab's online tools.

In this sense, Schwab is still committed to empowering individuals to invest smartly by themselves, rather than Schwab assuming the responsibility of ongoing portfolio maintenance, a service that many full-service brokers provide. While Schwab's customers are welcome to revisit Schwab's branch offices for additional guidance after they receive their initial consultation, specific investment decisions going forward, such as whether to add or drop a specific fund or stock, would require another consultation and an additional $400 fee.

Even with the new program, Schwab still falls short of being a full-service broker. That's likely to change soon, however. Earlier this month Schwab acquired U.S. Trust UTC, giving it the resources needed to provide wealthier clients with more full-service advisory and money-management offerings.

The upshot of the new consultation service and the U.S. Trust acquisition means more hands-on services and advice for Schwab's clients. It could also, however, alienate independent financial advisors who either participate in Schwab's AdvisorSource program, or use Schwab's services to execute trades for their clients. About one third of the $718 billion in Schwab's customer accounts is currently managed by independent advisors, who could take their business, and their client's assets, to companies with similar services, such as Fidelity.

In the end, the new consultation program highlights one of Schwab's key strengths as an online broker: its branch offices. Unlike most of its online competitors, such as E*trade Group [ticker EGRP], which just recently began embracing a so-called bricks-and-clicks strategy, Schwab has always relied on its branch offices to fuel its Internet business. Approximately 70% of Schwab's new retail accounts are opened via one of its branch offices. Today, Schwab has 356 branch offices in the United States, 49 of which opened in 1999.

As Morningstar equity analyst Alyssa Sibley points out, Schwab "has shown time and again its willingness to be flexible and adapt to changing market conditions." With its new consultation program, Schwab continues to do just that.

Frank W. Stanton is an analyst with Morningstar.com. He can be reached at [email protected]