Schwab Intelligent Portfolios Review
Schwab Intelligent Portfolios builds and manages your portfolio on your behalf without charging an advisory fee. We review its services in this article.
Charles Schwab is a longstanding financial services firm based in Westlake, Texas. It specializes in providing wealth management, banking, and brokerage services for its clients. For its wealth advisory product, you’ll typically have the choice to meet with an in-person expert or virtually. However, you can also opt for its robo-advisor offering, Schwab Intelligent Portfolios, which is an automated investment management platform.
In this article, we’ll provide a comprehensive review of Schwab Intelligent Portfolios. You’ll learn what you can expect from the platform’s services, as well as how they work. We’ll also break down its ideal clientele and fee structure. In addition, we’ll list key company info, such as its disclosure history and customer service contact methods.
Assets Under Management
Walter W. Bettinger II
3000 Schwab Way Westlake, TX, 76262-8104 United States
Pros and Cons of Schwab Intelligent Portfolios
- No advisory fee for base-tier
- Helps with tax-loss harvesting
- Premium tier allows you to work with a human advisor
- Integrates with other Schwab accounts
- Upholds a fiduciary duty
- High account minimums for a robo-advisor
- Investment mixes lack industry-specific options (i.e., ESG, cryptocurrency, etc.)
- 298 disclosures
Types of Clients
Schwab Intelligent Portfolios is ideal for retail clients, IRAs, living trusts, and organizations that need an automated portfolio management solution. Additionally, its account requirements make it accessible to a wide range of clients. Below are the required minimum investments for each tier of the program, per the service’s disclosure brochure:
|Schwab Intelligent Portfolios
|Schwab Intelligent Portfolios Premium
It’s also worth noting that, with Schwab Intelligent Portfolios Premium, you’ll gain access to a Certified Financial Planner (CFP) for assistance. It’s uncommon for a robo-advisor product to provide help from a real person when you need it. In this way, Schwab’s service may be ideal for a wider range of clients than other automated investing platforms.
How Schwab Intelligent Portfolios Works
Schwab Intelligent Portfolios is a discretionary automated investment management service. Its robo-advisor constructs your portfolio on your behalf according to the details you provide about yourself. Then, it will periodically rebalance to ensure you stay within your target asset allocation.
As you sign up, Schwab will ask you to fill out a brief questionnaire, so that it may understand your goals, risk tolerance, and time horizon. More specifically, these questions attempt to understand how you think as an investor. Here’s a summary of what each section includes:
- Goal for the account (i.e., growth or maintaining current investments)
- Intended use for the account (i.e., retirement, saving for a major purchase, etc.)
- How well do you understand stocks, bonds, and ETFs?
- What comes to mind when you think of risk?
- At any point, has your portfolio declined by 20%? How did you handle it?
- How decisive are you?
- Questions regarding your starting amount, time horizon, and monthly contributions
- Type of account (i.e., taxable vs. non-taxable)
Based on your responses, its algorithm will then recommend a model portfolio that aligns with your values. These portfolios largely comprise low-cost exchange-traded funds (ETFs), which invest in a variety of equities and bonds. The firm’s robo-advisor will also assist you with tax-loss harvesting, a strategy that counters capital gains tax if you meet a $50,000 account threshold.
Finally, if you pay a recurring advisory fee and invest at least $25,000, you’ll be able to utilize Schwab Intelligent Portfolios Premium. This affords you the same features as the lower tier but also gives you one-on-one access to a CFP, as well as financial planning tools. For those looking for a comprehensive financial planning and investment management solution at a relatively affordable price, Schwab checks the boxes with its premium option.
Fee Structure and Cost
Unlike most robo-advisor services, Schwab Intelligent Portfolios doesn’t charge an advisory fee or commission. You will also not be responsible for transactions or administrative fees related to the securities you own. Instead of charging you, the firm makes money from managing the ETFs that make up most of its clients’ portfolios. Its premium tier, however, charges a flat monthly rate for its services.
|Schwab Intelligent Portfolios
|Schwab Intelligent Portfolios Premium
|One-time $300 payment, then $30 monthly
Investing with Schwab Intelligent Portfolios requires you to put full confidence in it to smartly manage your funds. First, understand that Charles Schwab is a registered investment advisor (RIA) with the SEC. This mandates the firm, its representatives, and any investment management/advice software to act as a fiduciary at all times.
Despite Schwab being a fiduciary, you must understand how its technology invests your money and why that is. When you sign up for an account, you will provide detailed information regarding your values as an investor, including your goals, risk tolerance, and time horizon. Additionally, you’ll tell the firm, in general, how much you plan to contribute initially and each month thereafter.
Once Schwab Intelligent Portfolios understands how you think as an investor, it will then recommend a couple of model portfolios. These largely consist of ETFs and cash accounts meant to achieve your target asset allocation and properly diversify your investments. Additionally, to maintain your preferences, the robo-advisor will monitor your portfolio daily, rebalancing when necessary.
As with most robo-advisors, Schwab Intelligent Portfolios invests based on your preferences. This is mainly because there isn’t any experiential perspective involved as there may be with a human advisor.
Charles Schwab is an RIA with the SEC. Because of this status, it must report disclosures on its Form ADV. These refer to legal proceedings and regulatory actions against the firm or its investment advisor representatives (IARs).
Per FINRA’s BrokerCheck, Schwab has 298 disclosures on record. 57 of which are regulatory events. This total is on the higher end compared to several other firms. You can access more detailed information on these disclosures by visiting the SEC’s Investment Adviser Public Disclosure (IAPD) or BrokerCheck.
If you have questions or need assistance with your Schwab Intelligent Portfolios account, you can call (855) 694-5208 to specifically ask about the product or (877) 519-1403 for general inquiries about the firm. You may also utilize the live chat feature on the company’s website to speak with a representative.
How to Start an Account
You can open a Schwab Intelligent Portfolios account by visiting the firm’s website and clicking “Get Started.” From there, it’ll prompt you to fill out a short quiz regarding your goals, risk tolerance, and time horizon. You must also specify which type of account you intend to open, whether it be taxable or non-taxable. Finally, it’ll be up to you to select a model portfolio that works for you, and then contribute at least $5,000.
Also, you’ll need to decide whether you want to select the lower or premium tier. With Schwab Intelligent Portfolios Premium, you have unlimited access to a CFP, who can help you build a comprehensive financial plan and assist you when the need arises. Otherwise, you’ll only be able to use the base robo-advisor tools.
This review is based on publicly available information directly from Charles Schwab’s website and the SEC. Neither the firm nor its representatives have any say on what we’ve included on this page.
Frequently Asked Questions
Is Schwab Intelligent Portfolios a fiduciary?
Because Charles Schwab is registered as an RIA with the SEC, it must uphold a fiduciary duty at all times. This standard extends to its software because it is part of the company.
Is Schwab’s Intelligent Portfolios good?
Schwab Intelligent Portfolios is an attractive option because it doesn’t charge any advisory fee for you to sign up and use it. It also tailors model portfolios to your preferences as an investor. And, unlike some robo-advisor offerings, it allows you to leverage the help of a human financial advisor if you upgrade to its premium tier.
You should note, however, that it doesn’t necessarily allow you to select investment mixes that may be important to you, such as those related to environmental, social, and governance (ESG). If investing in such areas is important to you, it may be challenging to fulfill that need with Schwab.
How do I withdraw money from Schwab’s robo-advisor?
You can withdraw funds at any point from your account. But, if you do, keep in mind that it may have repercussions. For instance, you may need to transfer your desired amount to another Schwab account if it’s below your target cash allocation. If your withdrawal exceeds your target allocation, Schwab will automatically sell off shares of ETFs in your portfolio.
How often does Intelligent Portfolios rebalance?
According to its disclosure brochure, Schwab Intelligent Portfolios monitors your portfolio daily. If it sees any discrepancies with your target asset allocation, it will rebalance.
How does Schwab make money on Intelligent Portfolios?
Unlike most other firms, Schwab doesn’t charge an advisory fee for Intelligent Portfolios. Rather, its clients invest in Schwab ETFs, from which it generates revenue from fund management costs you pay. Additionally, the firm doesn’t generate a commission for assets it buys on your behalf.
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