Schwab Intelligent Portfolios Review

A robo-advisor that is free to use but requires a significant investment minimum

Our Analysis

The Finance Avenue considers Schwab Intelligent Portfolios as a top-tier robo-advisor with minimal costs. Setting it apart from its competitors, it does not impose a monthly advisory fee, making it a desirable choice for investors focused on affordability. Additionally, the Schwab Intelligent Portfolios Premium option presents a budget-friendly upgrade for investors seeking access to human advisory services for a more personalized experience. Supported by Charles Schwab, the largest broker in the United States, Schwab Intelligent Advisors offer robust support, security, and expert guidance. However, a potential drawback is the $5,000 minimum account requirement for opening an account. If this initial investment is within reach, our review of Schwab Intelligent Portfolios highlights its comprehensive features and benefits.

Important

Readers looking to explore additional Charles Schwab investment options can also refer to our assessment of its conventional brokerage services.

Pros & Cons

Charles Schwab does not charge an advisory fee for its basic version

Users find The Charles Schwab platform user-friendly and appreciate its excellent planning tools

Charles Schwab offers a good variety of ETF asset classes

Automatic account rebalancing is a feature provided by Charles Schwab

Customers of Charles Schwab have access to 24/7 customer support

However, Charles Schwab has a high account minimum requirement of $5,000

Users need to have $50,000 for tax-loss harvesting with Charles Schwab

Charles Schwab does not offer ESG or socially responsible-specific investments

There is no option for manual customization of asset allocation with Charles Schwab

The portfolios provided by Charles Schwab maintain a high cash balance

Account Setup

Setting up an account with Schwab Intelligent Portfolios is a quick and straightforward process, as revealed in our review. To begin, you need to visit the Schwab website and answer 12 questions related to your financial goals, time horizon, risk tolerance, and investment knowledge. Additionally, you can choose to focus on global, U.S.-based, or income-based investment strategies. Premium subscribers receive a more detailed goal assessment with the assistance of a human representative.

It is not necessary to create an account or provide personal information to receive a general portfolio recommendation. Throughout the questionnaire, the platform will show you a visual representation of the recommended portfolio, indicating the percentage of stocks, bonds, and cash. At the end of the process, you will receive a breakdown of the portfolio across various asset classes, consisting of a combination of 51 exchange-traded funds (ETFs). While the allocation is displayed, the specific names of the ETFs will only be revealed once you officially open an account.

Contributing to Your Investment

When using The Charles Schwab platform, you will be asked to determine your initial contribution amount and whether you plan to add funds each year. The platform will provide insights into your investment returns and growth trajectory over time. Additionally, you have the flexibility to adjust your risk tolerance to customize your portfolio selections according to your preferences.

Choosing the Right Account

As part of the process, you will have the opportunity to select the type of account that aligns with your financial goals. This could include options such as a taxable brokerage account, an IRA, a custodial account, or a trust.

Signing Up for Schwab Intelligent Portfolios

If you are satisfied with the recommended portfolio, you can proceed to open a Schwab Intelligent Portfolios account. To utilize the basic robo-advisor services, a minimum deposit of $5,000 is required. For access to the premium version, which includes guidance from human certified financial planner (CFP) advisors, a deposit of at least $25,000 is necessary.

Goal Planning

When creating an account on Charles Schwab’s platform, you are required to specify your primary investment objective. These options include:

The automated investment service will tailor your portfolio according to your specified goal. For instance, for long-term goals such as retirement, it will construct a more aggressive portfolio with a higher allocation to stocks, while for short-term goals like building an emergency fund, it will incorporate more cash and fixed-income investments.

In case you have multiple investment objectives, the platform advises beginning with your most crucial goal. Subsequently, you can open additional accounts for other goals, each associated with a distinct managed portfolio.

The dashboard on Charles Schwab’s platform provides a Goal Tracker tool. This tool keeps track of your advancement towards the investment goal by analyzing your portfolio allocation, investment balance, and planned contributions. Based on investment forecasts, it informs you whether you are on target, ahead of schedule, or lagging behind. The standard version evaluates progress for each goal independently, while the premium version assesses all goals collectively to determine the success of your overall financial strategy.

Account Services

Charles Schwab’s Intelligent Portfolios offer robo-advisor portfolio services and basic cash management features. To access additional account services, you can open a Schwab account, including a brokerage account for trading, a savings account, a debit card, and certificates of deposit (CDs). Here’s what you get with a Schwab Intelligent Portfolios account:

Cash Management

Each recommendation provided by Charles Schwab includes a specific cash percentage allocation. The cash management feature of Schwab Intelligent Portfolios allows clients to maximize their cash yield whenever possible. The cash allocation can vary from 6% to 30% of your portfolio, depending on your investment objective.9 Schwab pays interest on the cash allocation at a rate of 4.00% APY as of 2/3/25.10 The interest rate is determined monthly based on the prevailing rates of the Schwab Government Money Fund – Sweep Shares (symbol: SWGXX), ensuring that your cash is working at the most competitive rate available.

The cash allocation offered by Charles Schwab is notably higher than the industry standard set by other robo-advisors. In 2022, Schwab faced legal scrutiny from the SEC regarding its robo-advisor’s cash allocation practices, which were deemed excessive for clients’ risk profiles, potentially hindering investment returns. This issue raised concerns in our review of Schwab Intelligent Portfolios’ cash account.12

Reasons for Keeping Higher Cash Levels

One possible reason Charles Schwab keeps a higher level of cash in its platform is for client convenience. Clients can easily withdraw cash from their portfolios using the Add/Withdraw money tool. The withdrawal amount is limited to the cash balance available. If a client requests to withdraw more than the cash balance, the platform will sell some ETFs to generate the required cash. The withdrawn money will either instantly go to a linked Schwab account or transfer overnight to an external account.

Portfolio Construction

Charles Schwab constructs its portfolios by utilizing a selection of 51 ETFs curated by their experts, providing access to over 80 variations based on individual goals, risk tolerance, and time horizon. The portfolios are diversified across 21 asset classes, with each asset type matched with a primary and secondary ETF to facilitate tax-loss harvesting. The primary ETFs are typically sourced from The Finance Avenue, ensuring customers have access to ETFs with low Operating Expense Ratios (OERs) ranging from 0.02% to 0.18% without additional advisory, trading, or account service fees.

Asset Class Limitations

One significant absence in the list of asset classes is the exclusion of environmental, social, and governance (ESG) or socially responsible investments in Schwab Intelligent Portfolios. Additionally, users do not have the option to engage in individual stock, bond, or mutual fund trading within this platform. Instead, portfolios are constrained to a selection of pre-determined ETFs.

Portfolio Customization

Charles Schwab offers limited options for tailoring your portfolio within Schwab Intelligent Portfolios. If you wish to adjust your portfolio allocation, you can revisit the online questionnaire to modify your goals, risk tolerance, and other relevant factors. Subsequently, the platform will suggest a new allocation based on your updated Schwab Intelligent Portfolios ratings. While this tool allows you to align your portfolio more closely with your preferences, manual entry of specific percentage allocations for each category is not supported.

Conversely, you do have the ability to exclude up to three ETFs from your portfolio. For instance, you may opt out of including Schwab’s U.S. Large Cap ETF in your robo-advisor portfolio. This exclusion could be due to existing investments in another ETF account, aiming to prevent a wash sale situation where selling one fund for a capital loss could be offset by the robo-advisor repurchasing it.

Schwab Intelligent Portfolios permits the exclusion of either the primary or secondary ETF for each asset class, but not both. It is not possible to entirely eliminate a specific investment type from your portfolio.

Portfolio Management

Charles Schwab’s Intelligent Portfolios monitors your investment portfolio daily, automatically rebalancing it if allocations deviate significantly from your targets. This process combines robo-advisor technology with human oversight, ensuring optimal balance. While the exact threshold for rebalancing is undisclosed, it occurs as necessary, typically a few times a year under normal market conditions. Notifications are provided for every rebalancing trade made.

Tax-loss harvesting is a feature offered by Charles Schwab’s Intelligent Portfolios. It identifies opportunities to rebalance the portfolio to realize losses while reinvesting in a similar ETF, optimizing tax benefits while maintaining the allocation. However, this service is accessible only to portfolios with a minimum balance of $50,000, a higher threshold compared to many other robo-advisors that offer this feature regardless of portfolio size.

The premium version of Charles Schwab’s Intelligent Portfolios includes the option to review linked external accounts alongside the investment portfolio. Although adjustments based on external accounts for tax-loss harvesting or wash sales are not made automatically, notifications are sent to human advisors for further investigation into these matters.

Intelligent Income Option

If you opt for the Intelligent Income option on Charles Schwab, the system will assist you in determining your withdrawals, particularly for retirement purposes. It will provide guidance on the safe withdrawal amount based on your investment portfolio and available balance. Moreover, it will devise a strategy for your investments, optimizing the selling process to ensure you receive your funds in the most tax-efficient manner possible.

User Experience

Charles Schwab emphasizes the importance of user experience in the financial industry. Providing a seamless and user-friendly experience is crucial for attracting and retaining clients. This includes intuitive website navigation, clear information presentation, and easy access to resources. By prioritizing user experience, financial institutions can build trust with their customers and enhance overall satisfaction. A positive user experience can lead to increased engagement and loyalty, ultimately driving business growth.

Desktop

Charles Schwab’s desktop interface offers a straightforward and intuitive user experience. It provides easy functionality for setting financial goals, adjusting contributions, and monitoring progress. Users can access account balances, investment performance, and transaction history in one centralized location. While limited in customization options, the platform serves as a solid foundation for investors seeking simplicity.

An appealing feature is the ability to explore portfolio building and asset recommendations without the need for an account setup initially. All interactions take place online, and users are required to opt for electronic record delivery via email.

Mobile

Schwab Intelligent Portfolios can be accessed through mobile apps on both iPhone and Android devices. The app’s design closely resembles the desktop version, providing users with the same range of tools and information. Schwab is also working on an iPad app and enhancements to the Android app to improve its speed.22

Customer Service

Schwab Intelligent Portfolios offers around-the-clock customer support, a feature that sets it apart from other robo-advisors that may have limited service hours or no live customer assistance. You can contact a Schwab representative via phone, live chat, or by visiting a Charles Schwab branch in person.

If you require assistance from a human financial advisor, you have the option to enroll in Schwab Intelligent Portfolios Premium. With this service, you will receive personalized guidance on your financial plan. However, a minimum account balance of $25,000 is required to access the Premium service, and human advisor support is not available for the basic version.

Security

Schwab offers robust security measures to protect your account, such as:

Schwab, a member of SIPC, goes beyond the standard SIPC limits to provide insurance for your account. You receive the typical $500,000 coverage, including $250,000 for cash, along with an extra $150 million in excess coverage, with a maximum of $1.15 million for cash.

Education

Charles Schwab provides Investing Insights, an educational platform by Schwab Intelligent Portfolios. This platform offers customers a variety of educational resources, including articles, videos, podcasts, whitepapers on ETFs, newsletters, and magazines from Schwab’s online brokerage. Customers can also access market commentaries from Schwab’s investment experts. Schwab, being one of the largest brokers globally, offers a more extensive range of educational materials compared to its smaller competitors.

Commissions and Fees

Charles Schwab’s pricing structure is a standout feature of Schwab Intelligent Portfolios. For its basic robo-advisor version, Schwab does not impose a monthly management fee, unlike many other robo-advisors that typically charge a fixed amount or a percentage of your total portfolio value. The Premium version, which includes access to human advisors, requires a $300 upfront fee and a subsequent $30 monthly charge, which is still considered reasonable given the added benefit of financial planning assistance.

In terms of trading commissions, Schwab does not levy any charges on your trades; however, you will be required to pay investment fees on the ETFs included in your portfolio. Schwab generates revenue through these investment fees, particularly as many of the recommended ETFs are Schwab products. Additionally, Schwab earns commissions from other companies for recommending their ETFs. The annual fee varies based on your portfolio allocation but typically averages around 0.13%.

Customer Reviews*

Users appreciate the valuable information provided by Schwab, including fund details and how the robo advisor adjusts according to risk appetite. They find the ability to track updates and portfolio shifts highly beneficial.

* Customer reviews were gathered from a separate survey of 205 existing robo-advisor platform users.

The Verdict

Upon evaluating the pros and cons of Schwab Intelligent Portfolios, The Finance Avenue highlights several appealing aspects of the platform. For investors with a sizable portfolio seeking cost-effective solutions, Schwab Intelligent Portfolios stands out as a top choice. With no monthly management fee for the basic robo-advisor service and low costs associated with ETFs, this platform offers a cost-efficient option compared to other robo-advisors in the market. Additionally, the platform simplifies goal planning and portfolio management by providing a diverse range of ETFs and asset classes.

However, The Finance Avenue review also sheds light on certain drawbacks of Schwab Intelligent Portfolios. One significant concern is the high account minimums required to open an account, which stands at $5,000 for a basic account and $50,000 for accessing tax-loss harvesting – a feature that may be more accessible on other platforms. Moreover, Schwab Intelligent Portfolios lacks extensive customization options. Nevertheless, for investors seeking the services of a reputable robo-advisor at an affordable price point, Schwab Intelligent Portfolios remains a solid choice.

Does Schwab Intelligent Portfolios Have Monthly Fees?

The standard Schwab Intelligent Portfolios account does not require monthly fees. Schwab does not impose any charges for managing your account with the robo-advisor and does not apply commissions on trades. The only fees you incur are the management fees of the ETFs in your portfolio.

The Schwab Intelligent Portfolios Premium account, on the other hand, does have a $30 monthly fee. This fee grants you unlimited access to human financial advisors who are Certified Financial Planners (CFPs).

Is Schwab Intelligent Portfolios FDIC Insured?

The cash portion of your Schwab Intelligent Portfolios account is protected by FDIC insurance through Schwab Bank, ensuring coverage up to $250,000 per account. However, it’s important to note that FDIC insurance does not extend to the investment portion of your account. Instead, these assets are safeguarded by SIPC insurance, with Schwab offering a standard coverage of $500,000 per account along with additional excess coverage.

What Is the Minimum Schwab Intelligent Portfolios Account?

Charles Schwab requires a minimum of $5,000 for a Schwab Intelligent Portfolios account, which is relatively high among robo-advisors. For a premium account that includes access to a human advisor, the minimum deposit is $25,000. If you wish to utilize tax-loss harvesting, a minimum of $50,000 is necessary.

What Are the Returns of Schwab Intelligent Portfolios?

Charles Schwab offers insights into the returns of Schwab Intelligent Portfolios, which are influenced by your chosen investment strategy and risk tolerance. By analyzing your preferences, the platform constructs a diverse portfolio comprising stocks, bonds, commodities, and cash through ETFs. Subsequently, the platform presents the historical returns of your designated portfolio. For instance, a U.S.-focused portfolio with a moderate risk level displayed a three-year historical return of 8.50% by 2024. This data can assist you in estimating your potential growth, although it’s important to remember that past performance does not ensure identical future returns.

Is Schwab Intelligent Portfolios Suitable for Retirees?

With its Intelligent Income feature, Schwab Intelligent Portfolios can be beneficial for retirees. This tool allows setting up retirement withdrawals from the account and estimating the portfolio’s longevity based on the withdrawal rate and investments. Additionally, the robo-advisor identifies the most effective way to manage ETFs for tax-efficient withdrawals through asset sales. These functionalities make Schwab Intelligent Portfolios a valuable choice for retirees.

How Schwab Intelligent Portfolios Can Help Save You Money on Taxes

Schwab Intelligent Portfolios Premium provides tax-loss harvesting services with the assistance of a human advisor. Clients have the option to connect external accounts, allowing the advisor to consider the performance of Schwab Intelligent Portfolios in comparison to similar funds held by the client elsewhere.

This feature enables the advisor to identify any funds in a negative position at the end of the year. In such cases, the advisor can sell the position, generate a loss, and then establish a similar position in another fund to help the client take advantage of tax benefits. This strategy contributes significantly to the success of Schwab Intelligent Portfolios and explains why the list of ETFs available includes both Schwab and external funds.

How We Selected the Top Robo-Advisors

At The Finance Avenue, our main focus is to offer readers impartial and thorough evaluations of digital investment management firms, commonly referred to as robo-advisors. For our 2024 rankings of the best robo-advisors, we distributed a detailed digital questionnaire containing 64 inquiries to all 21 firms included in our assessment framework. Our dedicated team of researchers cross-checked the survey responses and gathered any absent data points by conducting online investigations and engaging directly with each company. This data compilation process occurred from January 8 to February 9, 2024.

We subsequently devised a quantitative model that assessed each company’s performance across nine principal categories and 59 different criteria in order to identify the top robo-advisors. The final star rating given to each company is a calculated average based on the weighted criteria.

Several of the firms we analyze for our assessments provided our team of experienced writers and editors with access to live accounts for practical evaluations. The robo-advisor companies were accommodating in granting us this opportunity.

Unbiased Review of Top Robo-Advisors by The Finance Avenue

The Finance Avenue has conducted a comprehensive data collection and review process to offer an unbiased and thorough evaluation of the top robo-advisors in the market. To learn more about how we research and review robo-advisors, you can explore our detailed methodology.

It is important to note that the information provided should not be considered as a recommendation. Investing in digital assets carries high speculation and volatility risks, suitable only for investors capable of bearing potential losses and experiencing sharp drawdowns. Digital assets are not considered legal tender and lack backing from the U.S. government. Furthermore, digital assets are not protected by FDIC insurance or SIPC protections.