Schwab has entered the robo advisors arena by introducing
Schwab Intelligent Portfolios. This directly competes with two of the test
accounts that I have, Betterment and Wealthfront. It apparently will function
the same as these, starting with a questionnaire to establish recommended
allocations. Then your funds will be invested in a series of ETFs. These will include
ETFs from Schwab, Vanguard, and iShares. There will be re-balancing and tax
loss harvesting on accounts reaching a certain size.
Schwab will not be charging account fees like Betterment and
Wealthfront. But they will make money on the accounts and disclose how on their
web site. Already there is criticism from their competitors and others. They
point out that the portfolios will have a cash component. This might cost potential
lost income for the account holder and another way Schwab can make money off of
the account.
There is a lot of information about this offering on the
Schwab web site. I haven’t reviewed all of it yet, but will. I’ll also be
opening a test account and will be posting my experiences. You can follow me on
Twitter @billlanke and I’ll let you know when I make more posts.
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