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Updated on Friday, July 16, 2021
Schwab Intelligent Portfolios, Charles Schwab’s robo-advisor offering, builds investment portfolios from a range of low-cost ETFs. It charges zero advisory fees and gives clients access to hundreds of local branches. However, Schwab Intelligent Portfolios may not be ideal for beginner investors, as you’ll need a minimum of $5,000 to get started. In addition, the platform doesn’t offer tax-loss harvesting until your portfolio hits $50,000. Schwab Intelligent Portfolios also requires you to keep a portion of your portfolio in cash, which could be a disadvantage for some investors.
|Access to human advisors||Yes|
- What is Schwab Intelligent Portfolios and how does it work?
- Schwab Intelligent Portfolios investment approach
- Schwab Intelligent Portfolios fees
- Schwab Intelligent Portfolios features and tools
- Schwab Intelligent Portfolios user experience
- Schwab Intelligent Portfolios safety and security
- Is Schwab Intelligent Portfolios worth it?
What is Schwab Intelligent Portfolios and how does it work?
Schwab Intelligent Portfolios is Charles Schwab’s robo-advisor offering that uses a combination of technology and Schwab’s team of experts to build investment portfolios.
Based on your answers to Schwab’s questions, a diversified portfolio is built for you using a selection of 51 low-cost ETFs chosen by the company’s professionals. The criteria used to select these ETFs will include low expense ratios, trading characteristics, exposure to broad asset classes and close tracking to their targeted index. The average annual expense ratios for these funds range from 0.04% to 0.18% — these are the only costs to consumers, since there are no management fees.
Once your portfolio is created and funded, Schwab Intelligent Portfolios will monitor your investment mix, and automatically rebalance your portfolio if your assets shift away from your target range. Tax-loss harvesting is offered, but only if you have invested assets of $50,000 or more in your account.
If you have at least $25,000 to invest, you qualify for Schwab Intelligent Portfolios Premium. This service includes all the benefits of the standard version of Schwab Intelligent Portfolios, plus unlimited help from a certified financial planner (CFP). However, it does come with a one-time planning fee of $300 and a monthly advisory fee of $30.
- Low cost: Schwab Intelligent Portfolios charges zero advisory fees for accounts, with the exception of its Premium offering. Many competitors, including Wealthfront and Betterment, charge annual fees of 0.25% or more even for their basic service.
- Automatic rebalancing: Schwab Intelligent Portfolios will monitor your portfolio over time and automatically rebalance it any time your allocation strays from your target percentages. This is offered to all clients at no additional cost.
- Accessible customer service: Schwab has hundreds of local branches, as well as 24/7 phone support and online chat — this makes it easy to connect with a representative.
- Retirement income planning offered: With Schwab Intelligent Portfolios, you can receive guidance on the best strategies for withdrawing your money in retirement. This includes suggestions on how much you can safely take out without adversely affecting your investment positions.
- Guidance from a CFP available: If you opt for a Schwab Intelligent Portfolios Premium account, which requires a minimum investment of $25,000, you’ll gain access to one-on-one guidance from a CFP, as well as a personalized financial plan. However, unlike the standard version, Schwab Intelligent Portfolios Premium does carry a one-time planning fee and a monthly advisory fee.
- Relatively high minimum to open an account: Schwab Intelligent Portfolios’ minimum requirement to open an account is higher than most competitors. For comparison, E*TRADE and Wealthfront require just $500 to open an account, and Betterment has no minimum balance requirement.
- Tax-loss harvesting available only on accounts with at least $50,000: While competitors such as Wealthfront offer tax-loss harvesting for all taxable accounts, Schwab Intelligent Portfolios reserves this service for portfolios of $50,000 and up. Tax-loss harvesting involves selling some losing investments at strategic times to minimize the taxes you might have to pay on investment gains in taxable accounts.
- Significant cash holdings required: In all of the suggested portfolios that are offered by Schwab Intelligent Portfolios, 6% to 30% of the balance is held in cash. As this is a conservative investment, it may not satisfy those who wish to be more aggressive in their investment approach. Robo-advisors like Betterment and Wealthfront do not require such a significant cash allocation.
Schwab Intelligent Portfolios investment approach
|Investment options||51+ ETFs|
|Tax-loss harvesting||(but only for those with minimum $50,000 balance)|
|Socially Responsible Investing|
Each asset class in Schwab Intelligent Portfolios has both a primary and a secondary ETF. For example, for U.S. Large Company stocks, Schwab Intelligent Portfolio lists a primary ETF of Schwab U.S. Large-Cap and a secondary ETF of Vanguard S&P 500.
Although many of the ETFs in the representative list of funds are Schwab’s own, the list also includes investments from Vanguard, Invesco, iShares and Xtrackers, among others. The representative fund list pulls from 27 asset classes, including various stocks, bonds, real estate investment trusts (REITS), preferred securities and gold and other precious metals.
Schwab also believes that cash investments have an important role in a well-diversified portfolio as it can help to reduce downside risks. A certain portion of a client’s portfolio will be allocated to cash allocation, with the exact percentage depending on the client’s investment strategy. This is accomplished through Schwab’s Sweep Program — with this program, free credit balances in your brokerage accounts are swept to deposit accounts at Schwab Bank, which does pay interest on cash balances.
Although you do have to wait until you have a balance of at least $50,000 to unlock tax-loss harvesting, Schwab Intelligent Portfolios does not charge any fees for this feature.
Tax-loss harvesting can help to minimize your tax burden by capturing losses, which therefore offset capital gains and leave more money to invest. This is done by automatically selling an ETF that has fallen below the price you paid for it, then replacing it with another ETF in the same asset class.
Smart Beta ETFs
Schwab Intelligent Portfolios include Smart Beta ETFs, which are designed to be a low-cost option for investing in smart beta strategies. This can lead to increased returns, though there’s no guarantee of outperformance.
Schwab Intelligent Portfolios fees
- Annual management fee: 0%
- Investment expense ratios: 0.04% to 0.18%
There are almost no advisory fees or commissions to pay with a Schwab Intelligent Portfolios account — however, the one exception is Schwab Intelligent Portfolios Premium, which has a one-time planning fee of $300 and a monthly advisory fee of $30.
You’ll owe ETF operating expenses for the ETFs in your portfolio, which typically range from 0.04% to 0.18%. Schwab will earn revenue from the Schwab ETFs included in client portfolios.
Schwab Intelligent Portfolios features and tools
Access to a CFP
If you prefer some human interaction and have at least $25,000 to invest, you might consider the premium version of Schwab Intelligent Portfolios. While most of the features are the same as the standard version, the premium version includes one-on-one assistance from a CFP, a unique perk for a robo-advisor. You’ll also get access to interactive planning tools that you can link to your accounts at other institutions.
Schwab Intelligent Income
This feature, available with Schwab Intelligent Portfolios, projects how much you can withdraw from your portfolio each month to support your retirement, or otherwise provide income from your investments. You can set up recurring withdrawals, which are then deposited into an account of your choosing. Schwab takes taxes into consideration when doing so in an effort to increase tax-efficiency.
Schwab Intelligent Portfolios user experience
To get started with Schwab’s robo-advisor, you’ll need to answer 12 questions about your investing goals, time horizon and risk tolerance. Based on this information, you’ll get a portfolio recommendation. You can then fund and open your account to get started investing.
Schwab Intelligent Portfolios offers 24/7 customer service over the phone at 855-694-5208 or via chat, as well as at its 365 branch locations. You can also access your account, place trades, deposit checks and check your balance through Schwab’s mobile app, which is available on iOS and Android platforms.
Schwab Intelligent Portfolios safety and security
- Member FDIC and SIPC
- Data protection policies
Charles Schwab is a member of the FDIC and SIPC, which insure cash in your bank and brokerage accounts, respectively. The SIPC provides up to $500,000 of protection, with a limit of $250,000 for uninvested cash balances. There is additional protection through London underwriters — when combined with SIPC coverage, this can provide protection up to $600 million.
Charles Schwab also has strong data protection policies to keep customer information secure, although it does share your personal information with affiliates so they can market to you (that being said, you do have the option to limit how your information is shared). Charles Schwab’s security measures include features like encryption and risk-based security technology, security alerts, voice ID and advanced authentication for login.
Is Schwab Intelligent Portfolios worth it?
If you have $5,000 to open an account and don’t mind not having access to tax-loss harvesting until your account balance reaches $50,000, Schwab Intelligent Portfolios could be worth considering. It boasts no management fees and offers a range of ETFs for its portfolios. However, you’ll need to be comfortable holding a portion of your portfolio in cash: Schwab Intelligent Portfolios requires this across its portfolio options, which may make a better choice for more conservative investors.
Alternatives to Schwab Intelligent Portfolios
|Account minimum||Annual fee||Accounts offered|
|Schwab Intelligent Portfolios||$5,000||$0||Individual and joint taxable, trust accounts, traditional IRA, Roth IRA, rollover IRA, UGMA/UTMA,|
|Betterment||$0||0.25%||Individual and joint non-retirement accounts, trust accounts, Roth IRA, traditional IRA, rollover IRA, SEP IRA|
|Wealthfront||$500||0.25%||Individual and joint taxable accounts, trust accounts, traditional IRA, Roth IRA, SEP IRA, 401(k) rollovers|
Schwab Intelligent Portfolios vs. Betterment
Investors who don’t have thousands of dollars for a high account minimum could find Betterment a better fit, as it requires no account minimum. Betterment does charge an advisory fee of at least 0.25% annually, unlike Schwab, which has no management fee.
If you’re not a fan of the high cash allocation with Schwab Intelligent Portfolios, note that Betterment does not require you to hold any cash. Like Schwab, Betterment also offers a premium tier that includes assistance from a CFP. Betterment’s Premium Investing option costs 0.40% annually, compared to $30 a month for Schwab, and requires a minimum of $100,000, while Schwab calls for just $25,000.
Schwab Intelligent Portfolios vs. Wealthfront
Wealthfront does require a minimum investment to get started, but it’s a fraction of Schwab Intelligent Portfolios’s requirement at just $500. Wealthfront offers most of the standard investment accounts that Schwab does but also includes a 529 college savings plan account. On the other hand, Schwab Intelligent Portfolios offers SIMPLE IRAs, which aren’t an option with Wealthfront.
Wealthfront doesn’t require you to allocate a portion of your portfolio to cash, which could be an upside from more aggressive investors. However, there’s no premium option offered — as such, Wealthfront is completely digital, so you won’t have the option of getting advice from a professional.
All information included in this profile is accurate as of 07/16/2021. For more information, please consult Betterment‘s website.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.