Schwab Intelligent Portfolios Review 2024
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Our Take
5.0
Reviewed in: Oct. 2024
Period considered: Aug. - Oct. 2024
The bottom line:
Unpaid non-client promotion
Pros & Cons
Pros
No portfolio management fee.
Wide ETF selection.
Customizable portfolios.
Cons
$5,000 account minimum.
Portfolios hold a large cash allocation.
Tax-loss harvesting only available on balances of $50,000 or more.
Compare to Other Advisors
Fees $2,000 and up per year (free initial consultation) | Fees 0.35% management fee | Fees Up to 1% per year |
Account minimum $0 | Account minimum $50,000 | Account minimum $250,000 |
Promotion Limited time $550 kick-start offer!* Get $300 into your brokerage account if you invest & maintain $5k within your first 90 days, plus the $250 enrollment fee will be waived for new annual members. Expires Dec 31, 2024 | Promotion None no promotion available at this time | Promotion $250 off one year of financial or tax planning |
Learn more on Facet's website | Learn more on Vanguard's website | Learn more on Harness Wealth's website |
AD Paid non-client promotion | AD Paid non-client promotion | AD Paid non-client promotion |
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Full Review
Where Schwab Intelligent Portfolios shines
Free management: Schwab’s automated portfolio offering has no management fee, making it one of the very few robo-advisors that offer its services for free.
Customizable: Schwab also offers customizable portfolios, which are great for folks who want more options than just a pre-made portfolio.
Where Schwab Intelligent Portfolios falls short
High minimum: Many robo-advisors require no minimum investment, making Schwab’s $5,000 minimum seem extra high.
Tax-loss harvesting minimum: This tax-optimization strategy is only an option to investors once their account balance has reached $50,000.
Alternatives to consider:
For low or no minimums: SoFi Automated Investing
For free tax-loss harvesting: Vanguard Digital Advisor, Wealthfront and Betterment.
What type of investor should choose Schwab Intelligent Portfolios?
Investors near retirement, due to Schwab's higher than typical cash allocation.
IRA investors.
Investors looking for free portfolio management.
Investors who already have other accounts at Schwab, such as a 401(k).
What the Nerds think 🤓
"Between Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium, there is something for investors at every step of their journey. No account management fees, low expense ratios, and a wide variety of investment options make it possible for investors to maximize their investment growth.
"However, while it can be a great platform to grow with, the account minimums may be a roadblock. The base Schwab Intelligent Portfolios has a $5,000 account minimum, and tax-loss harvesting is only an option once the account balance has reached $50,000."
Schwab Intelligent Portfolios at a glance
Reviewed: Oct. 2024
Period considered: Aug. - Oct. 2024
Account minimum | $5,000. |
Account management fee | $0. |
Investment expense ratios | Average expense ratio is 0.12%, but ranges from 0.04% for conservative portfolios and 0.18% for aggressive. |
Account fees | None, though some ETF operating expenses may apply. |
Portfolio mix | Over 80 portfolios, including up to 20 asset classes. Schwab offers Global, US Focused and Income Focused portfolios. |
Socially responsible portfolio option | No socially responsible portfolio offered, but clients can exclude up to 3 ETFs. |
Accounts supported |
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Tax strategy | Tax-loss harvesting is available at a $50,000 minimum balance. Clients must enroll in the feature. |
Automatic rebalancing | Automatic and free. |
Human advisor option | Clients have 24/7 access to professionals with Series 7/63 or 7/66 licenses. These advisors do not give personalized investment advice. |
Savings account/cash management account option | The portfolios in the Schwab Intelligent Portfolios® program include a cash allocation, which differs depending on the investment strategy selected. This cash allocation is implemented through the Schwab Intelligent Portfolios Sweep Program ("Sweep Program"), a required feature of the Schwab Intelligent Portfolios program. Schwab Bank High Yield Investor Savings account (offered outside of Schwab Intelligent Portfolios) currently offers a 0.48% rate. |
Customer support options (includes how easy it is to find key details on the website) | Phone and live chat support 24/7. |
How to sign up for a Schwab Intelligent Portfolios account
You can sign up for either a Schwab Intelligent Portfolios or Schwab Intelligent Portfolios Premium account on the Schwab website. Part of creating the account starts with answering a few questions about your risk preference and time horizon for your goals. Once completed, you'll be able to fund the account and start investing.
Keep in mind that with Schwab Intelligent Portfolios, you'll need to meet the $5,000 account minimum to get started. Many of Schwab’s competitors have low or no account minimums, which means you don’t need a large chunk of money to start investing. The minimum for Schwab Intelligent Portfolios Premium (detailed below) is $25,000.
How much does Schwab Intelligent Portfolios cost?
Schwab's base service, Schwab Intelligent Portfolios, charges no management fee. This is rare among robo-advisors, many of which charge around 0.25% of account balances as an annual fee.
Even though Schwab doesn’t charge a management fee, customers still pay the expense ratios on the investments used in their portfolios, and many of those are Schwab funds. The average expense ratio is 0.12%. At most robo-advisors, clients will pay these expense ratios based on the funds used.
Schwab charges no other account fees, which is rare.
Schwab Intelligent Portfolios portfolio selection
Schwab handily delivers on the diversification promise. It draws from 51 exchange-traded funds, or ETFs, which enables it to offer exposure to over 20 asset classes.
Like other automatic advisory services, Schwab cooks up a customized portfolio based on the answers to questions that get at an investor’s goals, time horizon and risk profile. Investors can tweak the allocation in Schwab's recommended model by picking as many as three ETFs to remove and Schwab will replace them with an alternative. For example, if you don’t like the foreign-market ETF chosen for your portfolio, Schwab’s feature lets you punt it in favor of another from the list. Schwab does not offer a formal socially responsible portfolio option, but the ability to exclude some funds may meet the needs of some socially conscious investors.
There is no limit to the number of Intelligent Portfolios accounts you can have (so long as there's $5,000 in each account), customizing each with a different goal and strategy.
The biggest criticism of Schwab Intelligent Portfolios’ strategy is that it allocates a good percentage of money to cash — a minimum of 6% all the way up to nearly 22.5% of total portfolio holdings (though Schwab says the average client's cash allocation sits between 6% and 10%), the latter of which makes sense for those at the conservative end of the risk spectrum. But even that may even be too cash-heavy for some investors.
Sitting on do-nothing cash may be good for investors who aren't disciplined about deploying their cash reserves, especially when the market is in a down cycle. But those who have other plans for their cash and who desire a completely invested portfolio service may be turned off by this unavoidable cash allocation.
Other key Schwab Intelligent Portfolios features
Accounts supported
Schwab supports several different types of accounts, some of which are hard to find with a robo-advisor. Schwab has the typical offerings: Individual and joint taxable brokerage accounts and traditional and Roth IRAs, but the service also manages SEP, SIMPLE, inherited and rollover IRAs, as well as trusts, UGMA, UTMA, tenants in common and community property.
The variety in Schwab’s account offerings will meet the needs of many investors — you can set up a SIMPLE IRA if you’re a small business and want to create an employee retirement plan, set aside money for heirs with a revocable living trust and create a custodial account for a child.
Automatic rebalancing
With most robo-advisors, your asset allocation (or your portfolio’s percentage of stocks, bonds and other investments) is based on your personal goals and risk tolerance: How close are you to retirement and how much risk do you want to take? Schwab will suggest an allocation, and if your portfolio falls out of alignment, Schwab will automatically rebalance it for you for free.
Customer support options
Schwab customers can get phone and live chat support 24/7. You can also visit a Schwab branch and get help in-person.
Good to know about Schwab Intelligent Portfolios
Tax strategy
Tax-loss harvesting is one of the selling points of having a robo-advisor manage your portfolio. It’s a complicated task of selling loser investments in a taxable account to offset taxes on any gains. It's particularly valuable for investors in higher income tax brackets. At Schwab, the service is only available to clients who opt into the feature and have a minimum of $50,000 in their taxable account. Keep that in mind if it's a must-have feature on your wish list.
» Want to check out other providers? Here are our top picks for best robo-advisors.
Limited access to human advisors
Clients have 24/7 access to advisors with Series 7/63 or 7/66 licenses, though these advisors do not give personalized investment advice.
If you’d like access to an advisor who can give you personalized advice, check out Schwab Intelligent Portfolios Premium below.
Savings account/cash management options
Schwab offers a savings account with an interest rate of 0.48% as of this writing, as well as unlimited ATM fee rebates around the world, and no monthly service fees or account minimums. Some robo-advisors offer high-yield savings accounts with higher rates.
Schwab Intelligent Portfolios Premium
Schwab Intelligent Portfolios Premium is the company's hybrid advisor that offers the same portfolio options as the free service, alongside unlimited access to certified financial planners.
Premium requires a balance of $25,000 and costs $30 a month (billed as $90 quarterly) plus a one-time $300 planning fee. Schwab is one of the only online advisors we review that charges an upfront fee, which should be factored in when you compare the cost of services
Like most flat fees, Schwab's pricing is ideal for investors with higher balances. For example, when $30 a month is expressed as an annual percentage of assets, with a $25,000 account balance (the minimum you can have), you’ll pay 1.44%. But if you have a $200,000 balance, that fee drops to 0.18% – which is even cheaper than the 0.25% industry standard for a more basic robo-advisor service. But when you factor in the $300 one-time planning fee, that $25,000 balance has a much higher 2.64% fee for the first year, and the $200,000 balance lands at 0.33%.
For context, compare these numbers with the 0.40% fee for Betterment Premium — Betterment's hybrid offering that also offers unlimited calls and emails to a team of CFPs.
Schwab Intelligent Portfolios Premium clients get access to a team of CFPs, receive a financial plan and get access to interactive planning tools. While the service doesn't initially pair clients with a dedicated advisor, clients can request to work with the same advisor. Clients can get guidance for any life milestone including buying a home to having a child, college savings, retirement, income and budgeting.
The portfolios are the same as the free offering, but they are robust and include up to 20 asset classes.
» Want to compare options? Check out our roundup of the best wealth advisors
Schwab Intelligent Portfolios Premium at a glance
Reviewed: Oct. 2024
Period considered: Aug. - Oct. 2024
Account minimum | $25,000. |
Account management, planning or subscription fee | $30 monthly subscription fee. |
Setup or onboarding fee | One-time $300 planning fee. |
Advisor access and credentials | Unlimited access to a team of advisors (clients can request to work with the same advisor). All advisors are CFPs and are available by phone and video conference Monday through Saturday with day and evening availability. |
Financial planning services | Comprehensive financial plan that provides a customized roadmap for reaching financial goals. Guidance for planning around any life milestone from buying a home to having a child, college savings, retirement, income, budgeting, etc. |
Brokerage options | Managed assets must be held at Schwab. Outside assets may be considered for planning purposes but would not receive investment advice until custodied at Schwab. |
Accounts supported |
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Charles Schwab brokerage accounts
If you'd rather build and manage a portfolio on your own — or you want a side portfolio to invest on your own, alongside your Intelligent Portfolios account — Schwab also scores high in our analysis of online brokers. The company offers a wide range of investments, low fees and four trading platforms.
on Charles Schwab's website
on Charles Schwab's website
$0
per online equity trade
$0
None
no promotion available at this time
Is Schwab Intelligent Portfolios safe?
Because of the volatility of the stock market, investing will always carry risk. But Schwab has all the expected security and regulatory protections in place. In addition, interest earned through the cash allocation portion of a Schwab Intelligent Portfolios account is "swept" into an FDIC-insured account, providing coverage of up to $250,000. Brokerage accounts at Schwab are also SIPC insured up to $500,000.
Is Schwab Intelligent Portfolios worth it?
Schwab Intelligent Portfolios has all the characteristics of an ideal robo-advisor: The company has a strong reputation, its portfolios feature low-cost ETFs and there is no management fee. We’re not fans of the high cash allocation, especially for younger investors, and we'd like to see tax-loss harvesting made available for any customers with taxable accounts, not just those with $50,000 or more. But for a free robo-advisor, those feel more like nitpicks than significant issues.
As for Schwab Intelligent Portfolios Premium, the $30 per month fee is lower than similar offerings from other advisors. It is worth a look for investors who seek more personalized, holistic guidance.