Schwab Intelligent Portfolios Review 2021 – sarah@sarahlicainwrites.com (Sarah Li-Cain)

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 an 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.

In addition, 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, there are ETF expense ratios — they’re still pretty low since they range from 0.04% to 0.18%.

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 — features include unlimited assistance from a Certified Financial Planner (CFP).

Schwab Intelligent Portfolios

Best for Hands-Off Investors
Key Features

No management fee
Expense ratios ranging from 0.04% to 0.18%
Premium account offers services of CFP

4 out of 5 Overall
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 it 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 Portfolios Premium

One-on-one CFP advice

Portfolio mix

51 ETFs/10 fund families

Customer support

Online, live, mobile

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
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. Called Schwab Intelligent Portfolios Premium, you’ll receive unlimited one-on-one help with a Certified Financial Planner, 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.

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 their 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 life 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 associated with Schwab Intelligent Portfolios.


Pros

You won’t be charged any management fees, unless you opt into their Premium feature.
Whether you prefer in-person, phone, or online service, you can do so with Schwab.
Yes, you’ll 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.
Schwab automatically rebalances accounts when necessary to maintain target allocation percentages.
Advice on how to best withdraw your money during retirement.


Cons

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.
Intelligent Portfolios typically hold anywhere from 6% to 30% of your portfolio in cash. Investors with a higher risk tolerance may find this a turn off.
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 and 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 (FAQs)

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 provide financial advice without much human intervention. The point of a robo-advisor is so that investors are 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.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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