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Charles Schwab launches ETF-based Institutional Intelligent Portfolios


Charles Schwab has launched Institutional Intelligent Portfolios – an automated investment management platform designed specifically for RIAs and sponsored by Schwab Wealth Investment Advisory.

Institutional Intelligent Portfolios enables firms to reach new market segments and scale their businesses, while complementing the invaluable wealth management services and client experience advisors already provide today.

Intelligent Portfolios offers RIA firms flexibility across portfolio construction, ETF selection, and branding for their client experience. Firms can create their own set of portfolios, reflecting their investment philosophy and choosing from more than 450 ETFs across 28 asset classes and all major fund families at their discretion. Those ETFs represent more than 80 per cent of the total ETF assets currently held by advisors’ clients at Schwab, and cover nearly 100 per cent of advisors’ clients’ assets invested in ETFs selected for the 28 asset classes represented in Institutional Intelligent Portfolios.

“Advisors see the opportunities ahead of them – whether the transfer of wealth from one generation to the next, the emergence of Generation Now investors, or the shifting investment priorities of retired clients,” says Bernie Clark, executive vice president and head of Schwab Advisor Services. “Recent research1 found that 70 percent of advisors believe that technology advancements enable firms to provide clients with a better experience, and many firms have identified automated solutions as a key opportunity in their firm’s growth strategy. Personally, I am very excited to see how entrepreneurial advisors use Institutional Intelligent Portfolios to expand their reach and to scale some elements of their practice.”

With Institutional Intelligent Portfolios, advisors can customise the platform to meet their business needs by determining their portfolio strategies and account features, setting each portfolio’s asset allocation and selecting their ETFs. They can also brand the client experience with their firm’s logo and contact information.

Upon completion of an initial Investor Profile Questionnaire – a series of questions about the investor’s investing goals and risk tolerance – the advisor’s client is mapped to one of the advisor-designed portfolios. Advisors then make a final review of the client’s profile and portfolio assignment and adjust it if necessary before approving it, at which time money can be invested. All portfolios must maintain a minimum allocation of 4 percent in cash.

Once established, these accounts can be automatically enrolled, with the advisor’s client’s agreement, for electronic delivery of trade confirmations, statements, communications and other documents, and advisors’ clients can access their account using Schwab Alliance or through a dedicated website and mobile app.

Institutional Intelligent Portfolios accounts will be displayed in Schwab Advisor Center (Schwab’s desktop client management system for RIAs), alongside the advisor’s other client accounts. Data on Institutional Intelligent Portfolios accounts will be available for download through Schwab Data Delivery to use in advisors’ portfolio management systems, including those offered through Schwab Performance Technologies such as PortfolioCenter, Schwab’s portfolio management tool for advisors. Users of Schwab OpenView Gateway also will be able to access real-time information on these accounts through all participating third-party applications.

The program’s pricing structure is based on total assets custodied with Schwab outside of the Institutional Intelligent Portfolios program. For advisors with less than $100 million in assets under management (AUM) with Schwab, there will be a 10 basis point platform fee. For those firms who maintain more than $100 million in AUM at Schwab, there will be no fee. No account service fees, trading commissions or custody fees will be charged to advisors’ clients by Schwab.

Schwab will also provide extensive resources and support to RIAs to help them evaluate and set up Institutional Intelligent Portfolios for their firms. A dedicated, specialised advisor service team will support technical and platform functionality. For clients of advisors, Institutional Intelligent Portfolios offers 24/7 customer service when the advisor is unavailable.

“Institutional Intelligent Portfolios is a pivotal addition to the breadth of offerings for RIAs at Charles Schwab,” says Clark. “Using technology to automate portions of the investment process can create efficiencies and scale for firms and enables them to augment their full-service wealth management capabilities for a broader range of clients.”

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