Schwab Intelligent Portfolios at a glance
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. 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 0.04 and 0.18 percent. In terms of money, that would be a cost of $4 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 0.7 percent (still well below a typical human advisor’s 1 percent fee), 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 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 26 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.
Education is one of the best aspects of some of the top players, such as rival Fidelity with its rival Go service, which gives clients access to all of Fidelity’s vast offering of tools and resources.
Schwab Intelligent Portfolios will appeal to many investors, perhaps especially to those where it simply becomes another Schwab account on their virtual dashboard:
- The no-fee structure for basic accounts is a huge advantage, and even if you have enough money to qualify for the premium tier you can still avail yourself of the entry tier.
- With its unlimited access to human advisors, the premium tier can provide a lot of value for customers (when it makes financial sense for them), and those fees stay flat regardless of how much they’re having managed.
- You’ll get all the benefits of being a Schwab customer, too – the prompt and helpful customer service, the educational elements and more.
If cost is your only objective but you don’t quite have the money to start at Schwab, check out SoFi Automated Investing. Ellevest is another option, with a core plan starting at just $1 a month. If you’re after unlimited access to advisors, Betterment is a strong pick. Those looking to consolidate accounts might also have a look at Merrill Guided Investing and Marcus Invest.
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