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All reviews are prepared by our staff. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication. Schwab Intelligent Portfolios Schwab Intelligent Portfolios Review 2022
Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Updated November 9, 2022 Bankrate logo The Bankrate promise
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Schwab Intelligent Portfolios Best for
Entry-level plan with no advisory fee Unlimited access to advisors Human financial planning Charles Schwab’s reputation precedes it: It’s long been known as a broker helping individual investors succeed at growing their wealth. But it’s also helping investors through its robo-advisor called Schwab Intelligent Portfolios, bringing one of the best offerings in the space. You can get a professionally created portfolio with no advisory fee or step it up to the premium service for a modest monthly fee and receive unlimited access to certified human advisors. It’s a compelling value proposition that should have you carefully considering Schwab for your next robo account. And that’s on top of the potential to receive one of the best bonuses for a new account. Schwab will be a strong fit for many investors, especially if they already have an account there. But those looking for a free advisor with no minimum could turn to , or they could turn to Betterment and , also top scorers in our reviews, with each having a wide range of available funds and tax-loss harvesting available to all (Schwab doesn’t). Schwab Intelligent Portfolios In the details
5.0 Bankrate Score 5.0 Bankrate Score About Bankrate Score Bankrate scores are objectively determined by our editorial team. Our scoring formula weighs several factors consumers should consider when choosing financial products and services. Account Minimum $5,000 for the basic tier, $25,000 for the premium tier Management Fee Free for the basic tier, $30 per month for the premium tier Portfolio Mix 51 ETFs across 26 asset classes. Three broad portfolio strategies: global, U.S.-based, income and the option for municipal bonds Fund Expense Ratio Costs range from 0.04 to 0.18 percent, depending on portfolio mix Account Types Individual, custodial and joint taxable; Roth, traditional and rollover IRAs; trusts; SEP IRA and SIMPLE IRA Cash Management Account Yes, cash sweep at FDIC-backed account at Schwab Bank, but must open separate account Customer service Phone and chat 24/7; more than 300 branch locations Tax Strategy Tax-loss harvesting is available and free with assets > $50,000 Rebalancing Yes Tools Many goal-setting and tracking tools, including Play Zone Promotion Cash bonuses starting at $100 for a $25,000 deposit, up to $1,000 (referred friend offer) Rates as of October 18, 2022 at 10:11 PM Pros Where Schwab Intelligent Portfolios stands out
Affordability
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 . 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 , 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. Customer support
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 and other short-term floating-rate notes The robo-advisor can also substitute tax-free municipal bonds in place of , where it may make sense for taxable accounts and higher-income individuals. Smooth onboarding
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, , or ? 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. Education
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 , which gives clients access to all of Fidelity’s vast offering of tools and resources. Cons Where Schwab Intelligent Portfolios could improve
Account minimum
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 the access to human advisors? For the basic service, though, you’ll have to show some financial commitment to access Schwab’s no-fee package. 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. 2021), 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 0.04 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. Tax strategy
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, when major competitors such as Wealthfront and 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. 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, 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. Review methodology
Bankrate evaluates brokers and robo-advisors on factors that matter to individual investors, including commissions, account fees, available securities, trading platforms, research and many more. After weighting these objective measures according to their importance, we then systematically score the brokers and robo-advisors and scale the data to ensure that you are seeing the top options among a field of high-quality companies. .