Schwab Intelligent Portfolios Review 2024

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.

• 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).

Reviewed: Oct. 2024

Period considered: Aug. - Oct. 2024

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.

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 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.

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 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

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.

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.

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.