The Charles Schwab Corporation has released additional details about the company’s new automated investment advisory service, Schwab Intelligent Portfolios.
The low-cost ETF-based diversified portfolios will be made available to retail investors in the first quarter of 2015, with a white label version for Registered Investment Advisors available shortly thereafter.
“Schwab Intelligent Portfolios addresses a growing demand for affordable, objective, sophisticated and convenient investment advice,” says Schwab president and CEO Walt Bettinger. “The service alters the investing landscape by combining innovative technology with proven approaches to advice and the support that only people can provide, all without charging program management fees, advice fees, or commissions, while using low cost exchange traded funds. It is a combination that Schwab can uniquely deliver due to the breadth of our capabilities – over four decades of firm-wide experience managing complex advisory, brokerage and money management services, banking and clearing systems – and our track record of technology, pricing and service innovation at large scale.”
With as little as USD5,000, investors will be able to open individual, joint, IRA, and revocable living trust accounts that offer technology-driven automated portfolios and a modern, streamlined client experience designed for ease and efficiency.
“While Schwab Intelligent Portfolios will be very accessible with a low account minimum, the combination of a simplified client experience with highly sophisticated portfolio construction, makes it appropriate for a wide range of investors – from those who are just getting started to those who have accumulated more wealth, but prefer a technology powered approach to investing,” says Bettinger.
The service, available via web and smartphone applications, will provide investors with:
• Diversified portfolios using Schwab and third party low-cost exchange traded funds (ETFs) as the underlying securities and portfolio management provided by Charles Schwab Investment Advisory, the team that oversees more than USD20 billion in managed portfolio assets
• Access to approximately 20 globally diversified asset classes including equities, fixed income, real estate, and commodities across US, international and emerging markets, and an FDIC-insured cash allocation
• Technology-driven daily portfolio monitoring and automatic rebalancing to keep the portfolios aligned to clients’ chosen investment strategies
• Automated tax loss harvesting available at no cost for portfolios starting at USD50,000
• The ability to automatically fund accounts on a recurring basis
• Fully paperless account open and account management
• Live help from investment professionals if needed and service support available 24 hours a day, seven days a week and 365 days a year
Bettinger adds that the development of Schwab Intelligent Portfolios is part of Schwab’s ongoing commitment to provide quality investment advice to a broad spectrum of investors. “We’ve seen strong growth in our traditional advisory solutions as more investors have sought out professional investment advice, and we believe there will always be people who prefer a relationship-centred model,” he says. “Schwab Intelligent Portfolios will make investing accessible to a broader group of investors who are less comfortable with a traditional approach to advice and prefer the power of technology to enhance and simplify their lives.”
A customisable version for Registered Investment Advisors (RIA) will be available shortly after the launch. Advisors will be able to apply their own branding to web and mobile applications for clients and have the option to modify asset allocations to customise the portfolios from a pool of eligible ETFs. Multiple pricing options will be available for these customised, white-labelled versions including an option with no platform or program management fee.
