Schwab Intelligent Portfolios review
A free robo-advisor worth considering if you have at least $5,000 to fund an account.
As the robo-advisor arm of Charles Schwab, Schwab Intelligent Portfolios stands as a convenient option for hands-off investors seeking portfolio management. But tax-loss harvesting is only available to portfolios of $50,000 and up.
What we think of Schwab Intelligent Portfolios
Honestly, there’s a lot to like about Schwab Intelligent Portfolios. You can complete the signup process entirely online, and your money is automatically put to work when you fund your account.
Like most robo-advisors, Schwab Intelligent Portfolios automatically rebalances your holdings to keep your investments on track. But unlike most robo-advisors, Schwab Intelligent Portfolios is free.
Free portfolio management is a major point in its favor. Not to mention the platform’s premium tier, Schwab Intelligent Portfolios Premium, is cheaper than most competitors and offers one-on-one access to a human financial planner. Oh, and even if you don’t have a portfolio large enough to access its premium tier — which requires a steep $50,000 deposit — Charles Schwab offers 24-hour customer support so you can connect with a human for help anytime.
The major drawback to this service is its tax-loss harvesting feature. Now, don’t get us wrong: we like tax-loss harvesting. Anything that strategically sells down investments to help investors save on capital gains taxes is a win.
We only wish Schwab opened up this feature to more investors. As it stands, Schwab Intelligent Portfolios’ tax-loss harvesting is only available to those with portfolios of $50,000 or more.
How does Schwab Intelligent Portfolios work?
Schwab Intelligent Portfolios come in two flavors: a standard robo-advisor that’s free to use and a premium tier that offers the same service but with the added perk of one-on-one access to a financial planner.
Sign up online, and you need at least $5,000 to get started — or $25,000 if you’re interested in Schwab Intelligent Portfolios Premium. During the signup process, you’ll be asked a series of questions about your financial goals and investment preferences. Based on your responses, Charles Schwab puts together an asset allocation strategy for you.
Once you’ve funded your account, Charles Schwab picks your portfolio holdings on your behalf and uses automatic portfolio rebalancing to keep your investments in line with your personal goals.
Schwab Intelligent Portfolios fees
It’s tough to beat free, and that’s exactly what Charles Schwab offers — for its standard service, at least.
But Charles Schwab isn’t the only broker that offers a free robo-advisor. It’s uncommon, to be sure: Most robo-advisors charge an annual advisory fee in the 0.25% to 0.50% range. And there are other free robo-advisors on the market, like those offered by M1 Finance and SoFi.
Now, full disclosure: Charles Schwab does make money through its Schwab Intelligent Portfolios service. How? By allocating a portion of each investor’s portfolio to a deposit account at Schwab Bank.
These cash holdings typically amount to no more than 10% of your portfolio. You don’t actively lose money when Charles Schwab does this — the money just sits there, really — but Schwab Bank earns interest on these holdings. Keep in mind that cash holdings are still part of a diverse portfolio and won’t necessarily hinder your investment strategy.
And as far as its premium service is concerned, the $30 monthly fee shakes out to a 0.12% annual fee on $25,000 — the minimum portfolio balance. This fee is far more competitive than premium robo-advisor tiers with Betterment or Wealthsimple, which both charge 0.40%.
|Schwab Intelligent Portfolios||Robo-advisor||$5,000||$0|
|Schwab Intelligent Portfolios Premium||Robo-advisor with unlimited one-on-one guidance with a financial planner||$25,000||$300 one-time planning fee, $30 monthly advisory fee|
Charles Schwab also offers two wealth management options for those seeking the guidance of a human financial planner: the Schwab Advisor Network and Schwab Private Client services. Portfolio minimums start at a steep $500,000 and offer access to one-on-one financial planning with certified analysts.
Pros and cons
There’s plenty to like about Schwab Intelligent Portfolios, but consider the drawbacks before you sign up.
- No advisory fees. The standard Schwab Intelligent Portfolios service is free to use.
- Account variety. You can open up almost any type of account with Schwab’s robo-advisor, including individual, trust, joint, custodial and various retirement accounts.
- 24/7 support. Round-the-clock customer support is available by phone and live chat.
- Account minimums. While some of its competitors let investors get started with any amount, you’ll need at least $5,000 to get started with Schwab.
- Limited tax-loss harvesting. Only portfolios of $50,000 and more qualify for tax-loss harvesting.
What do current users say?
Charles Schwab investor feedback is mixed. As of April 2021, Charles Schwab is not an accredited business with the Better Business Bureau (BBB) and receives 1.42 out of 5 stars after 26 customer reviews. The company’s Trustpilot reputation is also unfavorable, with a TrustScore of 1.8 out of 5 based on the feedback of 52 customers.
Charles Schwab has a total of 214 complaints to its name with the Consumer Financial Protection Bureau, but a majority of these complaints target the company’s banking products — not its robo-advisor. The same issue plagues its BBB and Trustpilot feedback: Not much of what we found is specific to Schwab Intelligent Portfolios.
That said, we unearthed some Reddit threads that mention Schwab’s robo-advisor. The sentiment among Redditors is quite positive. Investors praise the platform’s straightforward signup process and free, low-maintenance service.
The most common complaint? That it tends to keep up to 10% in cash holdings.
How do I get started?
To sign up, be prepared to provide your residential address, Social Security Number or Tax Identification Number and employer’s name and mailing address.
You’ll also need to answer a questionnaire about your financial goals. There are 12 multiple-choice questions in the questionnaire about your investment background, savings goals and portfolio expectations. The process can be completed online and takes between five and 10 minutes to complete.
From Charles Schwab’s website:
- Select Get Started.
- Answer the questionnaire by selecting the responses that best describe your financial situation and investment goals.
- Enter the amount you plan to invest and how long you’d like to hold your portfolio. Then select the type of account you’d like to open.
- Review the asset allocation Charles Schwab generates on your behalf and use the sliding scale to adjust your risk and return potential as needed.
- Enter your personal information, including your full name, email address, date of birth and Social Security number. Then create a login ID and password for your Charles Schwab account.
- Enter your residential address and phone number.
- Review Charles Schwab’s terms of service.
- Fund your account with an external transfer of funds or by rolling over an existing investment account.
Alternatives to Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is a solid robo-advisor, offering free portfolio management, round-the-clock customer service and a sweeping selection of investment accounts. But no platform is one-size-fits-all, and Charles Schwab may not be right for you.
Or maybe you’re bummed that Schwab’s tax-loss harvesting requires a $50,000 portfolio. If that’s the case, opt for a platform that offers tax-loss harvesting to all, like Betterment.
The bottom line? There are plenty of options out there for investors looking to have their portfolios managed for them. Explore your robo-advisor options, comparing fees, features and customer feedback to find the account that’s right for you.