menu
Overall

Charles Schwab Intelligent Portfolios is a winning combination of crazy low-cost (no annual management fee), quality market reports, and clean goal tracking. That is, as long as you are ok with a high cash allocation potentially affecting performance.

By Blain Reinkensmeyer / January 24th, 2018 / Updated: April 18th, 2018

Dislikes
  • Minimum of 6% cash in all portfolios
  • No advanced retirement calculator
Advertiser Disclosure

Review Sections:

The iconic Charles Schwab Corp. was founded by Charles “Chuck” Schwab in 1975 as a brokerage firm. Today, Charles Schwab boasts $3.18 trillion in client assets and 1.6 million corporate retirement plan participants.

In March 2015, Schwab launched Intelligent Portfolios, entering the robo-advisor space. A robo-advisor is a firm that offers digital portfolio management and goal tracking to investors without human advisors.

Intelligent Portfolios has accumulated $27 billion in assets with more than 200,000 accounts, making it the largest in the field. Competitor Betterment, which was founded in 2008, has $11 billion in assets.

Under Schwab Intelligent Portfolios, similar to all robo-advisors, new clients sign up online by first answering a dozen questions evaluating risk tolerance and investment objectives.

Schwab Intelligent Portfolios risk questionnaire

After answering these questions, you are designated a preset portfolio best suited for your requirements based on your answers. After that, you can decide if you want to proceed to become a client. If so, you fill in your personal information, set up your initial deposit, and complete the registration process.

Note, if you are already a Charles Schwab brokerage customer, registration is much easier, and all your accounts are one-click accessible post login.

Investment Approach

The average Intelligent Portfolios account has 8% to 10% cash, and the personal account we opened for testing fell within this range at 8.6%.

First and foremost, the key difference between Schwab Intelligent Portfolios and all other robo-advisors is every account maintains a 6% to 29% cash allocation. The average Intelligent Portfolios account has 8% to 10% cash, and the personal account we opened for testing fell within this range at 8.6%. Most of Schwab’s competitors limit cash in accounts to 1% or 2%.

Why do Schwab Intelligent Portfolio accounts hold so much cash? Well, Charles Schwab strongly believes a diversified portfolio with an appropriate cash allocation can deliver better returns than one with no cash. The catch-22 is that Schwab sweeps all portfolio cash each evening into its bank, generating risk-free interest. This is one major reason why Intelligent Portfolios charges no annual fee (more on cost below).

The bottom-line is your portfolio contains a higher amount of cash compared to competitors. To offset this additional cash and achieve returns similar to a competing portfolio seeking the same investment objective, the fund selection inevitably will be slightly more aggressive, and thus take on more risk.

How this really impacts portfolio performance over the long haul is anyone’s guess; the service is relatively new, and there hasn’t been a bear market since the stock market bottomed in March 2009.

That said, remember, you do save on ETF expense ratios, and there are no management fees. Schwab Intelligent Portfolios is the only robo-advisor to take this approach.

Schwab Intelligent Portfolios portfolio holdings

Another unique factor with Schwab Intelligent Portfolios is you can’t switch your asset allocation unless you re-take the risk questionnaire and provide different answers showing your risk tolerance has changed. This is an excellent idea because one of the main attributes of a robo-advisor is to prevent investors from making emotional decisions in a market downturn.

One final key difference is the number of investments in your portfolio. With Betterment, we were placed in 10 funds – all with Vanguard. With Intelligent Portfolios, we were invested in 18 funds. While the bulk of our assets were predictably placed in Schwab funds, our portfolio also included iShares, Vanguard, and a J.P. Morgan currency fund.

All in all, Schwab has 37 different portfolios it selects from for investors based on risk tolerance and investment objectives. The firm also includes 53 different Schwab and third-party Exchange Traded Funds (ETFs) – a more robust selection than most of its competitors. Considering all the portfolio construction is automated, clients simply benefit from Schwab’s 42-year history and deep analytical approach to the market.

Cost

Intelligent Portfolios doesn’t charge an advisory fee, commission, or account fees. The only fees charged to clients are the net expense ratios charged by the ETF holdings in the portfolio (every robo-advisor does this). The average portfolio expense ratios range from 0.06% for a conservative portfolio, to 0.15% for a moderate portfolio, and 0.20% for an aggressive portfolio.

Theories aside, the bottom line is clear; Schwab Intelligent Portfolios is hands-down the lowest cost robo in the industry.

Schwab has a $5,000 minimum for Intelligent Portfolios, which is about average in the industry. Being the only robo-advisor in 2017 to charge no annual management fee, the cost savings add up over time in a big way. However, again the trade-off is having a large cash allocation, which Schwab’s competitors will argue outweighs the savings from charging no management fee.  

View All FeesSchwab Intelligent PortfoliosBettermentWealthfrontTD Ameritrade Essential PortfoliosFidelity Go
Total AuM$30.6 Billion$11.8 Billion$10 Billion$16.6 BillionNA
Minimum Deposit$5,000.00$0.00$500.00$5,000.00$5,000.00
Annual Fee - $5,0000.00%0.25% 0.25%0.30%0.35%
Annual Fee - $25,0000.00%0.25%0.25%0.30%0.35%
Annual Fee - $50,0000.00%0.25%0.25%0.30%0.35%
Annual Fee - $100,0000.00%0.25%0.25%0.30%0.35%
Annual Fee - $1,000,0000.00%0.25%0.25%0.30%0.35%
Cost 5 Stars 4.5 Stars 4.5 Stars 4 Stars 4 Stars

Theories aside, the bottom line is clear; Schwab Intelligent Portfolios is hands-down the lowest cost robo in the industry. After Charles Schwab was founded in 1975, it revolutionized trading by being the first broker to set a low, flat fee for regular stock trades. Schwab is clearly taking that same innovative stand with Intelligent Portfolios.

Tools

The Intelligent Portfolios Investing Insights area is miles ahead of traditional robo-advisors.

Schwab developed the Intelligent Portfolios website as a separate entity from the Schwab website. If you are already a Schwab client you can go to your main dashboard and see an overview of all your Schwab accounts and analyze them in aggregate – a nice touch. That said, if you want to dive deeper into your Intelligent Portfolios assets, you need to go to the Intelligent Portfolios website.

Charles Schwab accounts summary

I found it nice that Intelligent Portfolios has its own website and unique brand design. The experience is focused on the product, which means none of the distractions of a traditional online trading account. This is a different strategy than Schwab’s broker competitors Fidelity Go, Merrill Edge Guided Investing, and ETRADE Adaptive Portfolio, which all keep the experience completely on their primary website.

After testing all the robo-advisors for several months, I preferred the separated experience.

Schwab Intelligent Portfolios account dashboard

Another unique aspect of Intelligent Portfolios is Schwab made a wise decision to feature its “Investing Insights” section on the Intelligent Portfolios page. For Schwab, Investing Insights is its premier in-house research section, filled with articles and market research.

Among a slew of articles and research, clients have access to the Intelligent Portfolios quarterly performance reports which I found to be excellent. With a robo-advisor there is no human advisor to call, so having a detailed market report from the industry leader in research is a huge net benefit.

schwab intelligent portfolios investing insights

All in all, the Intelligent Portfolios Investing Insights area is miles ahead of traditional robo-advisors Betterment and Wealthfront and serves as yet another benefit of Intelligent Portfolios being a Schwab brand.

In terms of calculators, Intelligent Portfolios doesn’t have traditional calculators; however, the firm does provide its Goal Tracker tool. When you sign up, you set up a goal and choose the time-frame as well as the outcome. Then, you’ll get updates on the site showing where you stand with your goal.

Schwab Intelligent Portfolios goal summary

Goal Tracker makes its assessment based on your account and market performance. This tool is helpful but lacks the depth to compete with the best retirement calculators in the industry. Personal Capital’s Retirement Planner is a standout because you can sync bank accounts, credit cards, and portfolios to provide much more accurate spending predictions. Similarly, Betterment’s RetireGuide is also better than Intelligent Portfolios because it allows you to link outside investment portfolios and use that data to improve recommendations. While Schwab’s main site features a variety of robust tools, its retirement calculator is one tool that has room for improvement.

Finally, in terms of its mobile apps, Schwab continued its strategy of keeping Intelligent Portfolios separate from its traditional app. Schwab’s mobile app for iOS and Android is excellent.

Finally, in terms of its mobile apps, Schwab continued its strategy of keeping Intelligent Portfolios separate from its traditional app. Schwab’s mobile app for iOS and Android is excellent.

Schwab Intelligent Portfolios mobile app

Most of the robo-advisor mobile apps just contain basic information and direct you to the website even to read an article. But with Intelligent Portfolios, you can manage your goals, check your portfolio, and read Investing Insights articles all through the app.

Other Notes

Intelligent Portfolios makes tax loss harvesting available to clients with at least $50,000 invested. In comparison, Wealthfront, Betterment, and TD Ameritrade Essential Portfolios also make it available to all clients. Tax loss harvesting is an automated program where the firm will automatically sell funds with losses to offset any capital gains to reduce your tax bill.

Schwab allows investors to exclude three ETFs at any time. While impactful in only niche circumstances, this is a unique feature for current Charles Schwab clients because you could be heavily invested in these ETFs in your other portfolios. Few competitors provide this functionality.

Lastly, in March 2017, Charles Schwab launched a new program, Schwab Intelligent Advisory, to accompany Schwab Intelligent Portfolios. By paying only a 0.28% management fee per year, clients gain access to human advice with CFP professionals. The program is designed to compete with Vanguard Personal Advisor Services. From what we understand, Intelligent Advisory uses the same interface as Intelligent Portfolios.

Final Thoughts

If you’re comfortable with more cash in your portfolio, then Intelligent Portfolios is an easy winner.

It’s clear that Charles Schwab executives took a great deal of time building Schwab Intelligent Portfolios. Investing your assets with the trusted Schwab brand is a key advantage over other non-broker robo-advisors such as Betterment and Wealthfront.

The bottom-line is that Intelligent Portfolios has created an exceptional program by offering an innovative, low-cost way to invest in the markets with a detailed approach. It’s worth considering, and if you’re comfortable with more cash in your portfolio, then Intelligent Portfolios is an easy winner.

Methodology

To find the best robo-advisors we assessed, rated, and ranked eight different firms. Instead of relying on website information and marketing materials as most editorials do, we opened and funded an account with each robo-advisor to acquire a true client experience.

Reink Media Group (RMG) remains committed to providing transparent and unbiased reviews of various financial services and segments, including Robo-Investment Advisors (“RIA’s”). Although exempt from registration as an investment advisor under the Investment Advisors Act of 1940, 15 U.S.C. §80b-1, et seq, RMG works tirelessly to ensure compliance with all applicable Security and Exchange Commission rules and regulations for entities which perform reviews and/or receive payments for advertising and solicitation. Please be advised that for purposes to this Review, RMG utilized a live account with actual funding which was later closed once the Review’s test period was complete.


Blain Reinkensmeyer

Reviewed by Blain Reinkensmeyer Blain heads research at StockBrokers.com and has been involved in the markets since placing his first stock trade back in 2001. He developed StockBrokers.com's annual review format seven years ago, a format broker executives consider the most thorough in the industry. Blain currently maintains funded accounts with more than a dozen different US-regulated online brokers and has executed thousands of trades throughout his career. He enjoys sharing his experiences through his personal blog, StockTrader.com.

Schwab Intelligent Portfolios Competitors

Select one or more of these brokers to compare against Schwab Intelligent Portfolios.


Ratings Overall

*Schwab Intelligent Portfolios was not included in the latest annual review, as a result this data may not be up to date.

Summary

Cost
Investment Approach
Platforms & Tools

All pricing data was obtained from a published web site as of 02/20/18 and is believed to be accurate, but is not guaranteed. The StockBrokers.com staff is constantly working with its online broker representatives to obtain the latest pricing data. If you believe any data listed above is inaccurate, please contact us using the link at the bottom of this page.

arrow_drop_upBack to top