Schwab Intelligent Portfolios Review 2023
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Schwab Intelligent Portfolios: Best for
- No management fee for basic plan
- Access to human advisors
- Variety of investment options
Charles Schwab has been a leading discount broker for some time, so it’s no surprise that its robo-advisor offering, Schwab Intelligent Portfolios, is among the best in the industry. Its basic plan allows you to build a portfolio with no annual management fee and low-cost funds, making Schwab a solid choice for cost-conscious investors. If you decide to upgrade to its premium plan for a reasonable monthly fee, you’ll get unlimited access to certified human financial advisors, giving you the best features of robo-advisors without sacrificing what you get from a traditional financial planner. On top of that, you’ll get Schwab’s strong customer service offering as well as educational resources that can help with questions you may have.
Schwab Intelligent Portfolios does come with an account minimum of $5,000 for the basic plan, which is above average in the robo-advisor industry, and you’ll need $50,000 before you start tax-loss harvesting, which other robos offer to everyone.
Schwab will be a strong choice for many investors, especially if you’re already a client of the broker. However, if you’re looking for another low-cost option that doesn’t have a minimum investment, you might consider SoFi Automated Investing. Betterment and Wealthfront are other leading robo-advisors that offer tax-loss harvesting for all customers.
Schwab Intelligent Portfolios: In the details
Pros: Where Schwab Intelligent Portfolios stands out
Schwab Intelligent Portfolios has two service tiers – basic and premium. They both offer good value, although at different price points and they target audiences having varying needs.
The base-level service offers key features of a robo-advisor at no fee: portfolio management, auto rebalancing and tax-loss harvesting, though you’ll need at least $50,000 to receive the tax-loss harvesting feature. That fee is lower than what you’ll find across the industry, where the standard is about 0.25 percent. To put that in perspective, you’re NOT paying about $25 annually for every $10,000 you have invested at Schwab.
The premium-level service ups the game in one key way – unlimited access to advisors with a certified financial planner (CFP) designation – and it could be a game-changer for many clients. These advisors must operate by a fiduciary standard, that is, in your best interests.
The cost: $30 a month plus a one-time $300 set-up fee. It’s an attractive price, especially if you’re flush with cash because you’ll pay one flat monthly price regardless of how much money you bring to the table. In contrast, most robo-advisors charge a percentage of your assets, so that fee keeps growing as your assets grow.
Essentially, Schwab is trying to attract two groups with its robo-advisor: entry-level investors with some but not a lot of money and those with a bit more who can see the value in its premium tier.
Of course, investors will also have to pay for the ETFs they’re invested in, as they would at any robo-advisor or if they invested on their own. Schwab says that a typical portfolio would have an expense ratio of between 0.03 and 0.18 percent. In terms of money, that would be a cost of $3 to $18 annually for every $10,000 you have invested there.
Premium-tier human advising
Just a few more words on Schwab’s premium tier because it tries to solve a problem that many investors have with traditional robo-advisors: the lack of a human advisor for less routine questions and more specialized expert support. So by adding a human advisor into its offering, Schwab is trying to bridge a gap in what a typical robo-advisor provides. That’s the big added feature of the premium tier and likely the most compelling reason for you to upgrade to it.
But you’ll have to bring at least $25,000 to take advantage. For that reason, the premium tier is not likely to make sense for many investors. And depending on your needs, it may not even make sense at this minimum. At the minimum threshold, you’ll pay an effective fee of 1.4 percent, though that rate falls quickly as you grow your assets. Sitting on a million bucks? You’re still paying only that $360 fee, an effective rate of below 0.04 percent. So it can be highly beneficial for the mass affluent.
The premium tier provides serious value for those who can bring the money here. And you can get access to human advisors for much less than the $100,000 that rival Betterment requires.
One of Schwab’s top strengths as a broker is its customer support, whether that’s via phone, chat or physical branches. So it’s good to see that robo-advisor customers have access to the company with the same high level of service as its brokerage customers. That includes 24/7 access to U.S.-based customer support via phone or chat.
You’ll also be able to go into a Schwab branch, at more than 300 locations, for further help. For some clients, this physical presence may be an advantage over online-only rivals.
Broad range of investment options
In total, Schwab Intelligent Portfolios uses 51 different ETFs across 27 different asset classes, and these form the building blocks of all potential portfolios. A larger range of investment choices may allow the robo-advisor to tailor the portfolio better to achieve desired outcomes.
Schwab offers three broad portfolio strategies from which it can customize your individual portfolio:
- A global strategy, which includes U.S. and international stocks, fixed income and cash
- A U.S.-based strategy, which includes U.S. stocks, fixed income and cash
- An income-focused strategy, which offers more exposure to “blue-chip” companies, higher-yielding assets such as preferred stocks and other short-term floating-rate notes
The robo-advisor can also substitute tax-free municipal bonds in place of fixed-income securities, where it may make sense for taxable accounts and higher-income individuals.
The onboarding process is as smooth and as seamless as these things go. It’s particularly easy if you’re already a Schwab client, because much of your personal information is already loaded into the account, and all you need to do is verify that it’s correct and agree to some legalese.
From there you’ll answer a dozen questions about your goals, risk tolerance and return expectations. Are you saving for a specific goal, such as college, a house or retirement? The robo-advisor takes those specific needs into account as it creates your portfolio.
As you go through the questions, you can see your portfolio allocations take shape in a pie chart to the left. You’re comfortable with risk and want to buy more stock when the market is down? Watch your allocation to stocks climb! If you decide later that you don’t like your portfolio allocation, you can redefine your profile and receive different allocations.
You can be up and running in 10 minutes easily, and then you’ll just need to fund the account. If you already have assets at Schwab, you can quickly transfer them over and be on your way.
As an investor-friendly outfit, Schwab does a lot to help its clients succeed, including by helping educate them. You’ll have access to a wide variety of articles on personal finance, tax tips, buying a home, how to save for retirement and almost any type of other thing related to your wealth. Schwab also offers webcasts, podcasts, a magazine and even workshops at its branches.
Cons: Where Schwab Intelligent Portfolios could improve
There’s no question that Schwab’s minimums are way above what the rest of the industry typically requires to open an account (i.e., nothing or virtually nothing). You won’t be able to access even the basic service without bringing $5,000 to the account, and the premium tier requires a much heftier $25,000.
In the case of the premium tier, it may already be a moot point if you have relatively few assets. Why pay the monthly fee, especially if you don’t need access to human advisors? For the basic service, though, you’ll have to show some financial commitment to access Schwab’s no-fee package.
One downside to Schwab Intelligent Portfolios is that you’ll need at least $50,000 in the account to take advantage of its tax-loss harvesting service, which has the robo trying to maximize your tax benefit. So if you have the minimum amount on either the basic or premium tiers, you still won’t be able to access this potentially valuable feature. That’s too bad, as major competitors like Wealthfront and Betterment provide this feature to all users.
You’ll have to specifically opt into tax-loss harvesting, which you can do as you open your account or later.
Invested heavily in Schwab funds
Let’s be very clear: Schwab uses many of its own branded funds in constructing your portfolio, and that’s one way it can afford to offer its robo-advisor at no end cost to investors. By investing your money in its own funds, it earns fees from those investments.
There’s a conflict of interest here, but Schwab discloses it clearly (not just in the fine print as other robo-advisors do) and does not duck the issue at all. In fact, Schwab discloses which ETFs it’s using for a given investment category. So you can easily look up the costs of these funds.
For stock funds (as of Dec. 2022), Schwab funds are the primary choice for all but a handful of investment selections, while Vanguard funds make up a large portion of secondary ETFs. For bond funds, Schwab selections comprise just a handful of the primary choices, with Vanguard and other well-regarded names dotting the field.
What does this mean for you? It may mean you’re paying more for a category than if you went with an independent robo. But it may also mean that you’re getting the lowest expense ratio on the market. And it looks like this second option is closer to the truth.
In comparing the robo’s primary and secondary ETF selections, Schwab funds were at least as cheap as the secondary funds being used. That doesn’t mean it’s using the cheapest ETFs on the market, but if they’re beating a discount leader like Vanguard, they’re doing something right.
Finally, as a practical matter, even if Schwab doesn’t use the very cheapest fund, it’s offering average expenses of between 0.03 and 0.18 percent on its investment portfolios. So if the broker were charging a slightly higher price of 0.01 or 0.02 percent, it would end up costing you literally $1 or $2 annually for every $10,000 you have invested – small potatoes.
No fractional shares
Schwab unfortunately doesn’t offer fractional shares as part of its robo-advisor program. That’s too bad since, in many respects, Schwab is so investor-friendly regardless of how much money you bring. To wit, Schwab’s brokerage allows investors to buy partial shares with as little as $5.
Fractional shares let smaller investors get started with less money, though perhaps the higher account minimum here helps make the fractional shares something of a moot issue for many. So this likely won’t be a dealbreaker for many who are considering Schwab.
Betterment5.0 Bankrate Score
Betterment offers a high level of service and features across every aspect of its robo-advisor, from its core investment management to low-cost funds to premium features such as tax-loss harvesting. You can also upgrade your service if you need unlimited access to human advisors, and get access to a feature-rich cash management account, too.
Axos Invest3.0 Bankrate Score
Axos Managed Portfolios offers a strong robo-advisor service with some premium features, all at a reasonable price. Clients also receive a wide choice of funds, including socially responsible funds, though the associated cash management account forces clients to jump through some hoops to receive what is only a mediocre interest rate.
Interactive Advisors4.5 Bankrate Score
Interactive Advisors has upped its game this year, with new features such as tax-loss harvesting that put it among the top robo-advisors. That’s on top of one of the widest range of investing choices, low-cost funds and low overall fees. As strong as all these features are, though, the robo-advisor doesn’t offer access to human advisors, not unusual among robo-advisors.
SigFig3.0 Bankrate Score
SigFig keeps costs low whether it’s account fees, fund fees or the annual management fee. You’ll also get access to human advisors and benefit from automatic rebalancing and tax-loss harvesting. But the lack of a cash management account and relatively high account minimums may cause some investors to look elsewhere.
E-Trade Core Portfolios3.5 Bankrate Score
E-Trade Core Portfolios offers a capable robo-advisor, one that may work best for customers looking to keep their accounts with the broker while having someone do the investing for them. Clients will get low-cost funds as well as less-common choices such as socially responsible funds, though the service doesn’t offer tax-loss harvesting or many tools.
Titan Invest3.0 Bankrate Score
Titan offers something unusual in the robo-advisor space: Titan combines its own actively managed investments with passively managed ETFs, something no other major robo-advisor does. It also hedges those portfolios, does not charge a management fee for the passive funds – a rarity among rivals – and has a low minimum, making it easy to get started.
Morgan Stanley Access Investing3.5 Bankrate Score
For younger investors looking to invest based on their values or certain themes, Morgan Stanley’s Access Investing provides a suitable option among robo-advisors. Investors can choose between impact portfolios that focus on environmental, social and corporate governance (ESG) issues, market-tracking portfolios that minimize fees and performance-based portfolios that attempt to outperform through active management.
J.P. Morgan Automated Investing3.0 Bankrate Score
J.P. Morgan Automated Investing provides portfolio management services with automatic rebalancing and may be a good fit for existing J.P. Morgan customers. But you’ll also pay above-average management fees and have limited account types to choose from. There’s also no tax strategy included in the offering.
Vanguard Digital Advisor3.0 Bankrate Score
Vanguard Digital Advisors keeps it simple: an investment portfolio comprised of four funds at a low all-in price, and then adds on helpful tools and educational components. The combination should do well for clients who don’t need a robo-advisor to provide everything under the sun but want competent investment management from a proven and knowledgeable leader.
Fidelity Go4.5 Bankrate Score
Fidelity Go offers a solid robo-advisor offering that beginning and cost-conscious investors will especially appreciate. However, investors looking for features such as tax-loss harvesting or comprehensive goal planning may be disappointed.
Personal Capital4.0 Bankrate Score
Personal Capital customers will get an experience that more closely resembles that of a traditional financial advisor than a robo-advisor, but you’ll need at least $100,000 to get started. You’ll also get a comprehensive tax strategy to help minimize what you owe to Uncle Sam. But this higher level of service does come at an above average cost compared to the rest of the robo-advisor industry.
Stash3.5 Bankrate Score
Stash’s managed portfolios might appeal to small investors who are looking to save as they spend, but the monthly fees can be high for investors who don’t have a large balance built up and there are only a few types of accounts available.
M1 Finance4.5 Bankrate Score
M1 Finance takes some of the best of what brokers and robo-advisors do and mixes it into a new service that provides automated investing in a fully customizable portfolio – all for no cost. If you want to take it up a notch, you can pay an additional fee and receive a host of upgraded features, including one of the best cash management accounts out there.
Wealthfront5.0 Bankrate Score
Wealthfront offers a strong lineup of features – sophisticated portfolio management using low-cost funds – that showcase why it’s one of the leading independent robo-advisors. It provides a strong cash management account, a robust planning tool and premium features such as tax-loss harvesting that may more than pay back your annual fee.
Ellevest3.5 Bankrate Score
Ellevest brings a competent and well-considered robo-advisor, pitching itself to women, whose financial needs are traditionally underserved. But don’t think it won’t work for anyone who needs nuanced investment management, since it offers low-cost funds, socially responsible funds and – unlike most rivals – a flat monthly fee, making it advantageous for those with more to invest.
Acorns3.5 Bankrate Score
Acorns is a good choice for new investors who are starting with small sums of money, allowing customers to build a diversified portfolio with just a few dollars. However, the fees are above average for small account values, though they’ll decline as your portfolio grows, and you won’t find any tax strategy as part of the robo-advisor offering.
Wells Fargo Intuitive Investor4.0 Bankrate Score
Wells Fargo Intuitive Investor is a solid robo offering that gives customers easy access to human financial advisors at no additional cost along with tax-loss harvesting that can help you save on taxes. However, the management fee is above average unless you’re an existing Wells Fargo banking customer.
Ally Invest Managed Portfolios4.0 Bankrate Score
Ally Invest Robo Portfolios are a good option for new investors who pay particular attention to costs. Existing Ally clients may also appreciate having all their finances in one place. Unfortunately, Ally doesn’t offer tax-loss harvesting or provide human advisors to help with those especially difficult questions.
Merrill Guided Investing3.5 Bankrate Score
Merrill Guided Investing offers a credible investing service for Bank of America customers, but its high management fee makes it less attractive among a competitive field of robo-advisors. Merrill offers several positives, including access to human advisors and low-cost investment funds, but premium features such as tax-loss harvesting are missing.
SoFi Automated Investing4.0 Bankrate Score
SoFi Automated Investing gives cost-conscious investors a solid robo-advisor offering that comes with access to human financial advisors at no additional cost. But the lack of tax-loss harvesting and no socially responsible investing options may cause more sophisticated investors to look elsewhere.
Marcus Invest4.0 Bankrate Score
Marcus Invest offers the core feature of a robo-advisor – portfolio management – and then adds some twists, such as several portfolio types, all for a cost-competitive fee. It’s a great add-on for current Marcus customers, though some features of higher-end robo-advisors such as tax-loss harvesting and an expansive toolset are missing.