Schwab Intelligent Portfolios Review 2024

Our Take

Schwab Intelligent Portfolios is a quality robo-advisor with very low expenses. Unlike most competitors, it doesn’t charge a monthly advisory fee, making it an excellent option for cost-conscious investors. The Schwab Intelligent Portfolios Premium version now provides an affordable upgrade path for investors who want a robo-advisor with access to a human advisor to help them maximize the experience. Schwab Intelligent Advisors is also backed by the support, security, and investment advisors of Charles Schwab, the largest broker in the country. One drawback is that you need at least $5,000 to open an account. If you can meet this high minimum account limit, our Schwab Intelligent Portfolios review found that this platform has much to offer.

Account Overview

Account Setup

Our Schwab Intelligent Portfolios review found that setting up an account is quick and easy. You get started through the Schwab website. It will ask 12 questions about your goals, time horizon, risk tolerance, and overall investment knowledge. You also decide whether to focus on global, U.S.-based, or income-based investment strategies. Premium subscribers get a more in-depth review of goals with a human representative.

You don’t have to create an account or enter personal information to get the general portfolio recommendation. As you answer the questions, the platform will give you a visual estimate of what kind of portfolio it will recommend, with the percentage of stocks, bonds, and cash. By the end, it will tell you how the portfolio would break down with different asset classes, using a mix of 51 exchange-traded funds (ETFs). While you see the portfolio allocation, you won’t know the names of the actual ETFs until you formally open an account.

The platform also asks how much you want to contribute at first and whether you’ll add money each year. It will predict your investment return and growth over time. You can adjust the risk tolerance to change the portfolio selections if you want something different.

During the survey, you decide what kind of account you’d like, such as a taxable brokerage account, an IRA, a custodial account, or a trust.

If you are happy with the portfolio recommendation, you can sign up for a Schwab Intelligent Portfolios account. You must deposit at least $5,000 to use the basic Schwab Intelligent Portfolios robo-advisor and $25,000 for the premium version, which gives you access to human certified financial planner (CFP) financial advisors.

Goal Planning

When you set up your Schwab Intelligent Portfolios account, it asks for your primary investment goal. The options include:

• Saving for retirement
• Saving for major upcoming expenses, like education or health bills
• Saving for a special expense like a wedding or house
• Building an emergency fund
• Building long-term wealth without a specific goal

The robo-advisor will design your portfolio based on your goal. It will create a more aggressive portfolio with more stocks for long-term goals, like retirement, while using more cash and fixed-income investments for short-term goals, like an emergency fund.

If you have multiple investment goals, the platform instructs you to start with your highest priority. Then, you can launch additional accounts with additional goals using different managed portfolios.

The Schwab Intelligent Portfolios dashboard offers a Goal Tracker tool. It monitors your progress toward the investment goal based on your portfolio allocation, investment balance, and planned contributions. Based on investment projections, it will tell you whether you’re on track, ahead of schedule, or behind schedule. The basic version only considers whether you’re on track for each individual goal, whereas the premium version considers them all to rate whether your overall financial plan will be a success.

Account Services

Schwab Intelligent Portfolios only provides robo-advisor portfolio services and basic cash management features. You can access more account services by opening a Schwab account, like a brokerage account for trading, a savings account, a debit card, and certificates of deposit (CDs). With that in mind, here is what you have with just a Schwab Intelligent Portfolios account.

Cash Management

Each portfolio recommendation from the platform will have a percentage set in cash. Schwab Intelligent Portfolios cash management helps clients take advantage of a higher yield for cash if possible  The allocation can range from 6% to 30% of your portfolio, depending on your goal. Schwab pays interest on your cash allocation, (4.93% APY as of 2/1/24). Each month it sets the interest rate based on the ongoing rates of the Schwab Government Money Fund – Sweep Shares (symbol: SWGXX).This keeps your cash portion working at the best possible rate available.

The cash allocation is significantly higher than the typical recommendation for other robo-advisors. In 2022, Schwab settled a lawsuit and penalty with the SEC, which said its robo-advisor was putting too much in cash for clients' risk profiles, creating a drag on returns. This was a red flag for our Schwab Intelligent Portfolios cash account review.

The reason the platform keeps its level of cash higher than normal may have to do with client convenience. You can take cash out of your portfolio whenever you want using the platform's Add/Withdraw money tool. You can withdraw up to your cash balance. If you ask to withdraw more, the platform will sell some of your ETFs to free up cash for your withdrawal. The money will go instantly to a linked Schwab account or transfer overnight to an external account.

Portfolio Construction

Schwab Intelligent Portfolios builds its portfolios using a combination of 51 ETFs picked by Schwab experts. This gives you access to more than 80 variations depending on your goals, risk tolerance, and time horizon. Schwab builds its portfolios across 21 different asset classes, including:

• U.S. large company stocks
• U.S. small company stocks
• International stocks
• Real estate investment trusts (REITs)
• U.S. corporate bonds
• Gold and other precious Metals
• Cash

For each type of asset, Schwab uses a primary ETF and a secondary ETF. This allows it to go back and forth for tax-loss harvesting purposes. The primary ETFs are typically from Schwab. This allows the company to offer customers ETF options with low Operating Expense Ratios (OERs). The OER for these ETFs range from 0.02% to 0.19% with no advisory, trading or account service fees.

One notable missing asset class: Schwab Intelligent Portfolios does not offer environmental, social, and governance (ESG) or socially responsible investments. You also cannot trade individual stocks, bonds, or mutual funds. Your portfolio is limited to one of these pre-selected ETFs.

Available Investments

Portfolio Customization

You have limited options for customizing your portfolio with Schwab Intelligent Portfolios. If you’d like a different portfolio allocation, you can redo the online questionnaire to change your goals, risk tolerance, and other factors. The platform will then recommend a different allocation for your new Schwab Intelligent Portfolios ratings. You can use this tool to get closer to what you’d like, but you can’t manually enter what percentage you want for each category.

You do have the option to exclude up to three ETFs from your portfolio. For example, you might say you do not want Schwab’s U.S. Large Cap ETF in your robo-advisor portfolio. You might do so because you’re investing in an ETF with another account and don’t want the robo-advisor to accidentally have you run into a wash sale scenario where you sell one fund for a capital loss, but then the robo-advisor rebuys it, canceling out the tax break.

Schwab Intelligent Portfolios lets you exclude either the primary or secondary ETF for each asset class, but not both. You can’t remove a specific type of investment from your portfolio altogether.

Portfolio Management

Schwab Intelligent Portfolios tracks your portfolio and automatically rebalances if the allocations get too far off your targets. It monitors your portfolio daily and rebalances as needed, using a mix of robo-advisor technology and human oversight. Schwab does not say exactly what level of drift causes the rebalancing, but just that it happens as needed and usually occurs a few times a year in normal markets. The platform will give you a notification of each trade for rebalancing.

Schwab Intelligent Portfolios does offer tax-loss harvesting. It looks for opportunities to rebalance your portfolio to lock in the loss while reinvesting in a similar ETF, so you get a tax break while staying in the same allocation. However, you can only use tax-loss harvesting if your balance is at least $50,000. This is very high compared to other robo-advisors, which often include this service for portfolios of all sizes.

The premium version will consider any linked external accounts for your Schwab Intelligent Portfolios investment review. While it won’t automatically adjust based on the external accounts for tax-loss harvesting or wash sales, it will notify a human advisor to investigate these issues.

If you select the Intelligent Income option, the platform will help you figure out your withdrawals, like for retirement. It will tell you how much you can safely take out based on your investments and balance. It will also plan the investments and sell them so you get your money out the most tax-effective way possible.

User Experience

Desktop

The Schwab Intelligent Portfolios desktop user experience is simple, clean, and user-friendly. The platform makes it easy to set goals, readjust your contributions, and see whether you’re on track. You can see your account balances, investment performance, and past transactions in one convenient location. There’s not much to customize, but it’s a good basic setup for investors who don’t want something complicated.

It’s nice that you can start building your portfolio and see the asset recommendations without setting up an account first. The experience is all online, and you must receive electronic delivery of records by email.

Mobile

Schwab Intelligent Portfolios is available via both iPhone and Android mobile apps. The design is nearly identical, giving you access to the same tools and information as the desktop version. Schwab is also developing an iPad app and improvements to the Android app so that it works faster.            

Customer Service

Schwab Intelligent Portfolios provides 24/7 customer service. This is convenient as many other robo-advisors limit customer service to business hours or may not offer live customer service at all. You can reach a Schwab customer service rep by phone or live chat. You can also visit an in-person Charles Schwab branch.

If you want help from a human financial advisor, you can sign up for Schwab Intelligent Portfolios Premium. The advisor will work with you individually and give unlimited guidance on your plan. However, you need at least $25,000 in your account to use Premium. Access to human advisors is not available for the basic version.

Security

Schwab provides decent security measures to keep your account safe, including:

• Website encryption
• Two-factor authentication for logging in, with a voice option
• Automated alerts about account activity
• 24/7 account monitoring for cybersecurity
• Identity verification

Schwab, an SIPC Member Bank, provides insurance above the standard SIPC limits for your account. You get the normal $500,000 of coverage, including $250,000 for cash, plus an additional $150 million in excess coverage, with up to $1.5 million for cash.

Education

Investing Insights is Schwab Intelligent Portfolios' educational platform that gives customers access to a full range of educational articles, videos, podcasts, whitepapers on ETFs, newsletters, and magazines released by Schwab’s online brokerage. Included in this comprehensive offering are market commentaries from the many investment experts working at Schwab. As one of the world’s largest brokers, Schwab provides a wide range of educational resources compared to smaller competitors

Commissions and Fees

The Schwab Intelligent Portfolios cost was one of its highlights. Schwab does not charge a monthly management fee for the basic version of its robo-advisor. This is excellent, as most other robo-advisors charge at least some monthly fee, either as a dollar amount or a percentage of your portfolio. The Premium version with access to human advisors charges you $300 upfront, with a $30 monthly fee afterward. This is still very reasonable for access to financial planners.

Schwab does not charge commissions on your trades. You do need to pay the investment fees on the ETFs. Schwab makes money this way as many of the recommended ETFs for the robo-advisor come from Schwab. It also earns commissions from other companies for recommending their ETFs. The annual fee depends on your portfolio allocation but has a weighted average of roughly 0.13%.

The Bottom Line

After considering the Schwab Intelligent Portfolios pros and cons, we found there’s a lot to like about this platform. If you’ve got a reasonably large portfolio and want to keep fees low, Schwab Intelligent Portfolios is an excellent choice. You can sign up for the basic robo-advisor service with no monthly management fee and only owe for the ETFs, which is a steal compared to the typical robo-advisor. The platform makes planning your goals and portfolios easy by using a wide selection of ETFs and asset classes.

Our review of Schwab Intelligent Portfolios did find some notable issues. First, the account minimums are high. You need $5,000 to open a basic account and at least $50,000 to use tax-loss harvesting, a feature that’s more accessible elsewhere. Schwab Intelligent Portfolios also doesn’t offer too much customization. Still, if you want the support of a quality robo-advisor at a bargain price, this is it.

Does Schwab Intelligent Portfolios Have Monthly Fees?

The basic Schwab Intelligent Portfolios account does not have monthly fees. Schwab does not charge anything for managing your account with the robo-advisor. It also does not charge commissions on trades. You only owe the management fees of the ETFs in your portfolio.

The Schwab Intelligent Portfolios Premium account does charge a $30 monthly fee. In exchange, you get unlimited access to human financial advisors (who are CFPs).

Is Schwab Intelligent Portfolios FDIC Insured?

The cash portion of your Schwab Intelligent Portfolios account has FDIC insurance, as Schwab Bank holds the money. You receive the standard limit of up to $250,000 per account. FDIC insurance does not apply to the investment portion of your account. Instead, these assets receive SIPC insurance. Schwab provides the typical $500,000 per account plus excess coverage.

What Is the Minimum Schwab Intelligent Portfolios Account?

There is a $5,000 minimum for a Schwab Intelligent Portfolios account. This is high compared to most robo-advisors. If you want a premium account with access to a human advisor, you must deposit at least $25,000. To access tax-loss harvesting, you need $50,000.

What Are the Returns of Schwab Intelligent Portfolios?

The returns of Schwab Intelligent Portfolios depend on your investment strategy and risk tolerance. Based on your inputs, the platform designs a portfolio of stocks, bonds, commodities, and cash using ETFs. The platform then shows the historical returns of your target portfolio. For example, a U.S. based portfolio with a moderate risk profile had a three-year historical return of 7.20% as of 2023. You can use this information to predict your growth, but note that past performance does not guarantee the same future returns.

Is Schwab Intelligent Portfolios Good for Retirees?

Thanks to its Intelligent Income feature, Schwab Intelligent Portfolios can be good for retirees. This tool lets you set up retirement withdrawals from your account and predicts how long the portfolio will last based on your withdrawal rate and investments. The robo-advisor also determines how to best manage the ETFs to create tax-efficient withdrawals from selling assets. These features make Schwab Intelligent Portfolios a helpful option for retirees.

How Does Schwab Intelligent Portfolios Help You Save Money on Taxes?

Schwab Intelligent Portfolios Premium offers tax-loss harvesting services through the efforts of a human advisor. Clients can link external accounts, so that the advisor can consider the Schwab Intelligent Portfolio performance as well as similar funds the client holds elsewhere. 

This allows the advisor to recognize that if any of the client’s funds are in a net negative position at the end of the year, they can sell the position, take a loss, and reestablish a similar position in another fund, so that the client can take advantage of the fluctuation by reducing taxes. This is a big reason why the Schwab Intelligent Portfolios performs as well as it does and why the list of selectable ETFs includes a redundant grouping of Schwab funds with external funds.  

How We Review Robo-Advisors

Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known as robo-advisors, is a top priority of Investopedia. We used our 2023 consumer survey to guide the research and weightings for our 2024 robo-advisor awards. To collect the data, we sent a digital survey with 64 questions to each of the 21 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Jan. 8, to Feb. 9, 2024.

We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria to find the best robo-advisors. The score for each company’s overall star rating is a weighted average of the criteria:

• Account Services: 10.00%
• Account Setup: 5.00%
• Customer Service: 5.00%
• Fees: 15.00%
• Goal Planning: 21.00%
• Portfolio Contents: 17.00%
• Portfolio Management: 17.00%
• Security & Education: 5.00%
• User Experience: 5.00%

Additionally, during our 2023 research, many of the companies we reviewed granted our team of expert writers and editors access to live accounts so they could perform hands-on testing.

Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors.

Read more about how we research and review robo-advisors.

Separately, our research team conducted a survey of 205 U.S. adults aged 18 to 72 who are current clients of one of 18 robo-advisors. While the information collected did not influence the development of our ratings model, it was instrumental in gathering the valuable insights published in Investopedia's 2023 Robo-Advisor Consumer Survey.

Participants in our 2023 Robo-Advisor Survey opted-in to an online, self-administered questionnaire from a market research vendor. Data collection took place between Aug. 30, and Sept. 15, 2023, with 11 video interviews conducted with volunteer respondents from Sept. 7, to Sept. 17, 2023. Multiple quality checks, including screeners, attention gauges, comprehension evaluations, and logic metrics, among others, were used to ensure only the highest quality responses were included.