Schwab Intelligent Portfolios - Robo Advisor Review + SEC update (View my account too!)
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- Опубліковано 11 жов 2024
- -The Schwab robo-advisors, Intelligent Portfolio and Intelligent portfolio Premium are two low fee, diversified digital investment managers. The Premium version has access to CFP financial planners. Learn the features, pros, and cons from an expert investors and client.
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Bio: Barbara A. Friedberg, MBA is a former investment portfolio manager and university finance and investing instructor. She currently owns and manages Barbara Friedberg Personal Finance barbarafriedbe... and writes for US News and World Report, Investopedia, and Forbes Advisor. She is a regular panelist on Money Tree Investing Podcast (www.youtube.co....
Disclosures: I am not a licensed financial advisor, and this video is for informational purposes only. For financial advice, please consult your own advisor. Be aware that investing involves risk and that your investment values can go up and down over time. If you click on an affiliate link - we may receive a small affiliate commission to finance this UA-cam Channel.
I have an account with Schwab Intelligent Portfolios
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I was with Shwab until i looked into the no fee issue. Them having a high percentage cash allocation placed in their own bank which then they can loan out and make money off of along with them investing in their own stocks that have a higher avg fee than most others.. With that being said its like a hidden fee. I was disappointed that they weren't transparent. (Could have been written somewhere in the agreement) But at the time of opening my account I didn't see it.
This is what i understand from my research 🤷🏻♂️ i may not be completely accurate
*Some cash is okay but having 12% plus in cash seems rather high. But hey im still learning so maybe ill stand corrected.
Hi Carson, I understand that the cash allocation is an issue for some. Schwab was previously cited and fined by the SEC for not making the cash allocation transparent enough. Schwab lists the cash allocation prominently on the "Schwab Intelligent Portfolios" home page and includes a broad explanation. The cash is invested in a higher yield cash account. Consider the "cash allocation" as part of the fixed income/bond asset class, which is a portion of a diversified investment portfolio. If you're a younger, more aggressive investor, you can choose a more aggressive portfolio with fewer cash and bonds.
A benefit of the cash allocation is in declining investment markets, your cash allotment will serve to temper the losses.
In rising investment markets when the stock market is soaring, the cash allocation can curtail returns.
Every company needs to make money. A "price" you pay for investing in Schwab Intelligent Portfolios is a requirement for a cash allocation. If you're uncomfortable with holding any cash in your investment account, then you might want to consider investing with other robo-advisors, or on your own.
Thanks for writing in, Cooper,
Barbara
How often do they make adjustments to portfolios as the market changes?
Thanks so much for writing in with your question.
I'm curious as to why you are asking. In general, rebalancing is either done when asset values deviate a specific percentage from the target, or by the calendar, at pre determined time periods. There are pros and cons to each strategy. I'm not certain how often Schwab rebalances, and it really doesn't matter that much. The beauty of investing with a robo-advisor, is that they will make the rebalancing decisions on your behalf. I'm sure if you read the ADV, prospectus and/or called a Schwab Intelligent portfolios representative, you could receive a more specific answer.
@@BarbaraFriedberg I'm curious to know how a Robo advisor would respond to different market conditions. For example, if an ETF started losing value, would the Robo advisor sell shares and shift the investment to something more stable? Conversely, if they expected a particular fund to rise significantly in value, would they invest more in that fund? And in the case of an impending recession, would they move money into funds that are likely to be less affected?
@@fragile1976 That is a great question. Most robo-advisors provide a "risk tolerance and financial situation" quiz before you invest. Next, you will get a risk "score." The robo-advisor then crafts a portfolio in line with your "score." If you are more aggressive, which typically equates to being able to handle greater drops in your portfolio value, you'll be assigned a larger percentage of stock investments, and fewer bonds. While if you're more "conservative" and older or uncomfortable with the potential declines in your investments, then you'll be assigned a greater percent of bond funds vs stock funds. This will be your "target" portfolio.
Most robos do not respond to different market conditions, but to deviations in a clients preferred asset allocation.
Most robo-advisors rebalance, or buy and sell funds when your portfolio values deviate by a certain percent from your "target" portfolio. For example, if stocks decline, and bonds are stable or rise, the managers will buy more stocks and sell bonds, to return to preferred allocation.
The exception to this is with "actively managed" robo-advisors, such as T.Rowe Price ActivePlus Portfolios or Merrill Edge Guided Investing (MEGI).
Thanks for the great question.
Hello, I have a question I'm hoping that you can help me with, in my Intelligent Investor account there are 12 ETFs that have exp. ratios ranging from .03 to .49 , adding up to 2.34, divided by 12 they average out to .195. Should I consider the avg. exp. ratio my total account fee? Thanks
Hi Doug, With investment management, it is customary to break up fees. Nearly all ETFs have expense ratios, whether you buy them on your own or are invested in them through a robo-advisor. If you want to determine your average fund expense ratio, you'll multiply each fund's expense ratio, by the percent invested within that fund. Then you will sum the total. That will give you your average fund expense ratio.
Schwab's Intelligent investor doesn't charge investment management fees to manage and rebalance your account.
So, the fees you're paying to invest are only the ETF expense ratios.
Thanks, this is quite helpful!@@BarbaraFriedberg
I thought Schwab was clear that to participate in Intelligent Portfolios with no fee some money has to be held in cash. They publish past performance that included this drag. Still SEC collected $187M. Wow.
Tim, I'm glad that you said it. Your comment suggests that investors need to take some responsibility for their investments, even in managed accounts. I've had an account with the Schwab Intelligent Investors for several years, with the understanding that "there is no free lunch." Personally, I don't mind a "cash drag" in rising markets, because when investment prices go south, I understand the cash will stave off losses. I really appreciate your input. Barbara
Can i invest more than $25000 in the basic intelligent without no to premium? Do they force me to premium?
@@partyfame2024 Excellent question! You can invest as much as you would like in the basic Intelligent Portfolios with zero management fees. As a reminder to those reading, you'll need $5,000 to invest with Intelligent Portfolios. For this robo advisor with zero management fees, you're required to hold approximately 8% of the portfolio in their high yield cash fund.
had to dump my Schwab robo, it's riddled with fees
I understand that the underlying ETFs within the platform have expense ratios, like all other ETFs. What other fees are you referring to? Thank you for writing in with your experience.