Charles Schwab’s robo advisor offering Schwab Intelligent Portfolios combines the brokerage’s expertise alongside technology to build portfolios for their investors.
You can put your investment dollars to work by allowing the brokerage to build a portfolio based on a combination of their 51 low-cost exchange-traded funds (ETFs).
What Is Schwab Intelligent Portfolios and How Does It Work?
After signing up for a Schwab Intelligent Portfolios account, you’ll answer a series of questions designed to understand your investment goals and personality, such as your risk tolerance and why you’re investing.
Based on these answers, Charles Schwab will build you a diversified portfolio. In addition to the variety of ETFs offered, Charles Schwab also offers portfolios for six risk profiles — from conservative to aggressive growth — and three different investment strategies based on the types of securities you want to invest in.
The ETFs are based on factors such as how close they are to their targeted index, expense ratios and their exposure to broad asset classes. Even though you don’t need to pay portfolio management (or advisory) fees for the standard Schwab Intelligent Portfolios, there are ETF expense ratios. Luckily, these fees are quite low, ranging from 0.03% to 0.18% and sitting at an average of 0.13%.
After you’ve created and funded your account with Schwab Intelligent Portfolios, the broker will continue to monitor your portfolio and automatically rebalance it whenever your portfolio veers away from your predetermined allocations. You can also take advantage of their tax loss harvesting services when you have invested at least $50,000.
The brokerage also offers another offering called Schwab Intelligent Portfolios Premium for an additional fee. You’ll need to invest in a minimum of $25,000 and you must pay a one-time planning fee of $300 and a $30 per month advisory fee. The advisory fee gives you access to unlimited one-on-one guidance from a Certified Financial Planner (CFP), a digital financial plan, and online financial planning tools.
Schwab Intelligent Portfolios
Best for Hands-Off Investors
Key Features
- No management fee
- Expense ratios ranging from 0.03% to 0.18%
- Premium account offers services of CFP
After opening an account, Charles Schwab will monitor your portfolio and rebalance it as necessary to maintain your target allocation. Tax loss harvesting is available if you have invested a minimum of $50,000. The brokerage also offers premium services, where investors can speak to a Certified Financial Planner (CFP).
Schwab Intelligent Portfolios
Min. opening deposit
$5,000
Fees
None
Accounts offered
Standard brokerage accounts, IRAs, trusts, and UGMA/UTMA accounts
Promotion
None
Noteworthy Features
Customized Portfolio
Schwab, like other robo advisors, will create a customized investment portfolio based on answers you give such as your risk profile, financial goals and time horizon. You can also customize their recommended allocations by removing up to three ETFs and replacing them with ones of your choosing. Plus, whatever your allocation is, Schwab will ensure it purchases other ETFs based on what it initially recommended to you.
Investors can open as many Intelligent Portfolios as they want as long as each account is funded with a minimum of $5,000. It might be a smart move if you’re interested in investing based on different financial goals and risk tolerance.
Schwab Intelligent Portfolios at a Glance
| Feature | Details | |||
|---|---|---|---|---|
| Customized portfolio | Select up to three ETFs | |||
| Automatic rebalancing | Free for all accounts | |||
| Free tax loss harvesting | Min. $50,000 balance | |||
| Schwab Intelligent Income | Projects monthly retirement income and deposits in | |||
| Schwab Intelligent Portfolios Premium | One-on-one CFP advice | |||
| Portfolio mix | 51 ETFs/10 fund families | |||
| Customer support | Online, live, mobile |
Automatic Rebalancing
Schwab Intelligent Portfolios will monitor your account daily and rebalance it automatically when needed. It’ll also update your asset allocation if necessary, based on details such as your risk tolerance and how close you are to retirement.
For example, if your asset allocation is 70% stocks and 30% bonds, Schwab will automatically rebalance your portfolio so that your asset allocation is as close as possible to these percentages.
Tax Loss Harvesting
Investors who have at least $50,000 invested with Schwab Intelligent Portfolios can take advantage of automatic tax-loss harvesting by opting into this feature. Tax loss harvesting involves selling investments that are losing value in a taxable account so you can offset taxes on any gains from other investments. It can help you save money, especially if you’re in a higher income bracket.
Account Types
Investors with Schwab Intelligent Portfolios can open a wide variety of account types, including:
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Rollover IRA
- Custodial accounts
- Revocable living trusts
Schwab Intelligent Income
This feature projects how much you’ll be able to withdraw each month to help fund your retirement or have your investments provide you with income. Schwab will also consider how your withdrawals will affect your taxes. You can choose to set up automatic withdrawals on a recurring basis to be deposited into your account.
Schwab Intelligent Portfolios Premium
Investors who have at least $25,000 can sign up for Schwab’s premium version of their robo advisor services, Schwab Intelligent Portfolios Premium. With Premium, you receive unlimited one-on-one help with a Certified Financial Planner (CFP), access to online financial planning tools and a written customized financial plan to help you meet your financial goals. Keep in mind Schwab doesn’t automatically pair you with a dedicated advisor, but you can request to work with the same one.
The financial plan you receive is intended to help you with your financial goals. You can ask the CFP for advice for planning around major life events such as purchasing a home, saving for college, starting a family, increasing your income, budgeting tactics and even retirement strategies.
To become a premium client, you’ll need to pay an initial, one-time financial planning fee of $300, then an ongoing fee of $30 per month (billed quarterly at $90). Schwab is the only robo advisor so far that charges an upfront fee for similar services. Plus, while the flat fee seems pretty low considering you’re getting personalized advice, it can cost more compared to other competitors depending on your investment balance.
Portfolio Mix
Charles Schwab offers plenty of opportunities to diversify your portfolio with its 51 ETFs, giving you exposure to more than 20 asset classes. Since you can open as many Intelligent Portfolios accounts as you want, you can potentially diversify your portfolio even more, using each robo-advisor account to fulfill a different financial goal or strategy.
While the brokerage does offer you a customized portfolio based on the information you provide, you can further customize your allocation by choosing up to three of your own ETFs. Doing so gives you a bit more agency while still allowing you to tap into Schwab’s technology.
However, their strategy may allocate a decent chunk of your dollars in cash, starting at 6% and ranging up to nearly 30% for those who have indicated they want to be more conservative in their strategy.
While having some cash is fine, the allocation Schwab chooses might not be ideal for some. If you’re someone who would rather invest all their cash and aren’t interested in keeping cash with a brokerage, you may want to reconsider whether or not Schwab is the right choice for you.
Pricing and Fees
Schwab Intelligent Portfolios doesn’t change any management fees on their end, making it an affordable option compared to other robo advisors. However, there are expense ratios for your underlying investments, which range from 0.04% to 0.18%. Schwab mentions that most ETFs it uses in its client portfolios are on the lower end of this range.
Customer Support
Customers can get 24/7 customer service with Schwab Intelligent Portfolios by calling 855-694-5208 or via live chat. The brokerage is also accessible at any of their branch locations and through the Schwab mobile app, available on both Android and iOS.
Pros and Cons of Schwab Intelligent Portfolios
Here is our roundup of the pros and cons based on our Schwab Intelligent Portfolios review.
Pros
- Low fees: You won’t be charged any management fees unless you opt into the Schwab Intelligent Portfolios Premium feature.
- Wide range of customer service options: Whether you prefer in-person, phone or online service, Schwab offers a 24/7 customer hotline, live chat and hundreds of brick-and-mortar locations.
- Connect with a CFP: Yes, you need to pay for this service, but working with a CFP through Schwab tends to be more cost effective than if you were to pay for this service separately elsewhere.
- Automatic rebalancing: Schwab automatically rebalances accounts when necessary to maintain target allocation percentages.
- Retirement planning: You can ask Schwab how to best withdraw your money during retirement, such as how to ensure you can be more effective when it comes to paying taxes.
Cons
- High minimum opening balance: You’ll need at least $5,000 to open an account. This is higher than many other competitors, which only typically require a few hundred dollars.
- Sizeable cash holdings: Intelligent Portfolios typically hold anywhere from 6% to nearly 30% of your portfolio in cash. Investors with a higher risk tolerance may find this a turn off.
- Limited services for some: Investors can only get tax loss harvesting services if they invest a minimum of $50,000.
Is Schwab Intelligent Portfolios Right for You?
Schwab Intelligent Portfolios stands out because it offers some great services for investors who want to invest with robo advisors. The brokerage has a long-standing reputation, there are no management fees and portfolio options have low-cost ETFs.
However, the higher cash allocation may not be ideal for more aggressive investors. After a thorough Schwab Intelligent Portfolios review, we realized we’re not too keen on the fact that tax loss harvesting is only for those who have invested at least $50,000 with Charles Schwab.
The Schwab Intelligent Premium option is pretty decent, though it’s priced higher compared to other robo-advisors. Still, it’s cheaper than hiring your own financial planner, so that’s something to consider. Overall, we think Schwab Intelligent Portfolios is worth a second look, especially if you have a decent amount to invest.
Frequently Asked Questions (FAQ)
What Is Schwab Intelligent Portfolios?
Schwab Intelligent Portfolios is a robo-advisor that helps you allocate your portfolio based on information you provide, such as your risk tolerance and financial goals.
What Is a Robo Advisor?
A robo-advisor uses technology to manage investments and sometimes provides financial advice without much human intervention. The point of a robo-advisor is to empower investors to be as hands-off as possible and typically at lower costs. Read more about robo-advisors and how they can help you invest.
What ETFs Are in Schwab Intelligent Portfolios?
Schwab Intelligent Portfolios has 51 ETFs across 20 different asset classes and an FDIC-insured cash account option. The brokerage outlines all of their investment options here, including expense ratios and the reasons these assets were chosen.
Contributor Sarah Li-Cain is a personal finance writer based in Jacksonville, Florida, specializing in real estate, insurance, banking, loans and credit. She is the host of the Buzzsprout and Beyond the Dollar podcasts. Contributor Kristin Jenny contributed to this post.