Charles Schwab Wealth Management Review - MagnifyMoney
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Charles Schwab Wealth Management Review

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A subsidiary of the full-service Charles Schwab corporation, Schwab Wealth Management, also known as Schwab Asset Management, is an investment advisor and portfolio management company specializing in long-term core assets. Individual investors can access the firm’s portfolio management services in a few different ways — as a direct client, through wrap fee programs provided by broker-dealers or via their wealth managers. With just over 170 advisors, it’s registered to give financial advice nationally (all 50 states and several territories) and has locations in 11 states.

The bottom line: Schwab Asset Management touts a low-cost philosophy and focuses on pooled investment vehicles, such as exchange-traded funds (ETFs) and mutual funds.

  • Manages investment portfolios mainly for individuals and investment companies
  • Depending on the program, minimum investments range from $25,000 to $500,000
  • Features fees that are within the industry-normal fee range

All information included in this profile is accurate as of October 13, 2021. For more information, please consult Schwab Asset Management’s website.

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Overview of Schwab Asset Management

Schwab Asset Management (the trade name for Charles Schwab Investment Management, Inc.) is part of the larger Charles Schwab corporation, which is a full-service, international investing and banking business. The San Francisco–based company was founded in 1971 and pivoted to become one of the first discount brokerages in 1975.

Schwab Asset Management formed in 1989 and has since been successful, acquiring TD Ameritrade and USAA’s Investment Management Company in 2020. The wealth management arm of the firm today has just over 170 advisors that oversee $609.9 billion in assets.

A look at the firm’s founder, Charles Schwab

Charles “Chuck” R. Schwab started the business in 1971 and established the firm’s aim to make investing affordable. He earned an MBA from Stanford and has stated that being dyslexic helped him excel at conceptual visualization. The concept of low prices and fast order executions made his practice successful. He has publicly supported Republican leaders, including former President Trump, authored several bestselling investment books and remains Chair of the Board at Charles Schwab.

Schwab Asset Management’s pros

  • Lower minimum investment for some funds: The minimum required amount to invest with Schwab Asset Management through a wrap fee program is $25,000.
  • Low-cost philosophy: The firm’s goal is to make investing affordable, and its fees are within normal industry standards.
  • Convenience: Schwab Asset Management offers national service and is part of the larger Charles Schwab Corporation, which boasts a full range of services in financial advising, brokerage and banking.

Schwab Asset Management’s cons

  • Disciplinary disclosure: The U.S. Securities and Exchange Commission (SEC) and other financial regulatory agencies charged Schwab Asset Management with making materially misleading statements and omissions as part of a larger suit against the firm. See the section on disciplinary disclosures below.
  • High breakpoint tier schedule: Charles Schwab has a relatively low investment minimum and its fees decrease with the more you invest — yet, to reach the first fee breakpoint, you must invest $100,000 to $1 million, depending on the fund.

What types of clients does Schwab Asset Management serve?

More than 80% of Schwab Asset Management’s AUM comes from investment companies. The second largest group by AUM is individual investors followed by pooled investment vehicles.

The minimum account balance accepted at the firm ranges from $25,000 to $500,000 depending on the account.

Schwab Asset Management Investment Minimums
Account program Minimum investment requirement
Schwab Managed Portfolios™ $25,000
Schwab Personalized Indexing $100,000
Windhaven® Strategies $100,000
ThomasPartners® Strategies $500,000
USAA Managed Portfolios — UMP® Wrap strategies $25,000
USAA Managed Portfolios — UMP® Custom strategies $500,000
Wasmer Schroeder Strategies $500,000

Services offered by Schwab Asset Management

Schwab Asset Management offers portfolio management for individuals, small businesses, investment companies, pooled investment vehicles and other businesses and institutional clients. It does not offer financial planning or pension consulting services.

  • Portfolio management
    • ETFs
    • Mutual funds
    • Collective investment trusts
    • Money market funds
    • Index
    • Strategic beta
    • Active
    • Multi-asset
    • Separately managed accounts

How Schwab Asset Management invests your money

Charles Schwab offers ETFs, mutual funds and separately managed strategies to meet the needs of most investors. They focus on core funds and strategies, which aim to secure a long-term portfolio with central assets that have a track record of consistent returns. One of their specialities is low-cost index products, which aim to meet or beat the performance of industry indexes, such as Dow Jones and the S&P 500.

Portfolio/Fund name Investment strategy / focus
Schwab Managed Portfolios™ Strategy: Custom
Focus: ETFs and mutual funds
Charles Schwab Pooled Investment Vehicles Strategy: Quantitative and qualitative
Focus: Domestic and foreign equity and fixed income
Windhaven® Strategies Strategy: Quantitative and qualitative
Focus: Domestic and international equity, fixed income, ETFs and mutual funds
ThomasPartners® Strategies Strategy: Quantitative and qualitative
Focus: Foreign and domestic equity
USAA Managed Portfolios — Wrap strategies Strategy: Very aggressive to 100% fixed income
Focus: Mutual funds, money market funds, ETFs
USAA Managed Portfolios — Custom strategies Strategy: Very aggressive to 100% fixed income
Focus: Mutual funds, money market funds, ETFs, ADRs, individual stocks and bonds
Wasmer Schroeder Strategies Strategy: Fundamental, cyclical, quantitative and qualitative
Focus: Tax exempt fixed income, time-sensitive bonds (ultra short, short, intermediate, ladder), core bonds, core credit, multi-sector income, taxable fixed income managed ETF

Fees Schwab Asset Management charges for its services

Schwab Asset Management charges several types of investment fees. Here are the asset-based ones:

Portfolio/Fund name Direct client fee
Schwab Managed Portfolios™ 0.20% to 0.90% of AUM
Windhaven® Strategies 0.50% to 1.00% of AUM
ThomasPartners® Strategies 0.60% to 1.00% of AUM
USAA Managed Portfolios — Wrap strategies 1.60% to 2.20% of AUM
USAA Managed Portfolios — Custom strategies 1.30% to 2.20% of AUM, plus investment management fees
Wasmer Schroeder Strategies 0.08% to 0.75% of AUM, plus any wrap or brokerage fees

Additional costs include brokerage and wrap fees. Clients of the USAA Managed Portfolios also pay the operating expense ratio (“OER”) of ETFs and mutual funds used in the portfolios, plus program fees.

Schwab Asset Management disciplinary disclosures

The SEC requires all businesses of registered investment advisors to disclose any civil, regulatory or criminal actions that occurred within the last 10 years that could impact a client’s evaluation of the business or management.

Schwab Asset Management reports a disciplinary disclosure involving the offer, sale and management of two funds: the “Schwab YieldPlus Fund” and the “Schwab Total Bond Market Fund.” The SEC found that from 2005 to 2008, Schwab deviated from the funds’ policy on the asset allocation concentration without shareholder approval; made materially misleading statements and omissions about, as well as understated the weighted average maturity of, the YieldPlus Fund; and did not establish reasonable policies and procedures to prevent the misuse of material nonpublic information about the YieldPlus Fund.

For further information, visit the firm’s Investment Adviser Public Disclosure (IAPD) page.

Schwab Asset Management onboarding process

  • Meet with an advisor: Either in-person or digitally, communicate with a Charles Schwab advisor and ask how they could meet your investment objectives. If you choose to open an account, they can start the process.
  • Open an account: You may need to provide documents, such as proof of identification. You could do this in person or upload any required documents and add to or edit your digital profile.
  • Communicate with your advisor: Consider the investment advice and approve, alter or reject recommendations. Establish how often you’d like to check in with your advisor: quarterly, semi annually and annually are common choices.

Where Schwab Asset Management is located

Schwab Asset Management can serve investors in all 50 states and D.C., with physical offices in the following locations:

  • Arizona
  • California
  • Colorado
  • Florida
  • Illinois
  • Massachusetts
  • New Jersey
  • New York
  • Ohio
  • Oregon
  • Texas

Is Schwab Asset Management right for you?

If you’d like to fill out your portfolio with core funds and strategies, Schwab could be it. The firm has a low-cost philosophy, a minimum investment of $25,000 for some funds and industry-normal fees. However, its individual investor to advisor ratio isn’t favorable if you’re seeking more personal attention from your advisor. And if you’d like a shorter term, non-core investment strategy, another firm may better offer that specialization.

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