Schwab said the program, Schwab Intelligent Portfolios, is set for release in the first quarter of 2015, with a version for RIAs to come “shortly thereafter.”
“Schwab Intelligent Portfolios addresses a growing demand for affordable, objective, sophisticated and convenient investment advice,” said Schwab President and CEO Walt Bettinger, in a statement.
“The service alters the investing landscape by combining innovative technology with proven approaches to advice and the support that only people can provide,” he continued, “all without charging program management fees, advice fees or commissions, while using low-cost exchange-traded funds.”
(Bettinger told analysts in July that the company was working on online advisory solution. ETFs in the automated portfolio do have underlying operating expenses that clients must cover.)
The RIA version, Schwab says, will be introduced soon after the investor version. Advisors will be able to use their own branding of the program and also can tinker with ETFs to customize portfolios for clients. Plus, they can choose different charges or offer the service for free online and through mobile devices.
“The white-label program will let RIAs service clients in a much more scalable and efficient manner, which will help them grow their businesses faster,” said Naureen Hassan, senior vice president of Schwab Intelligent Portfolios, in an interview with ThinkAdvisor.
The minimum investment level is set for $5,000, lower than the investment minimums of many RIAs. “This means they can serve clients who previously were below their minimums, because they can do so in a more automated and scalable manner,” explained Hassan.
Plus, unlike with an automated investment program announced last week by Fidelity, assets held in Schwab Intelligent Portfolios will be custodied at Schwab. “It is our own product, not that of a third party or referral relationship,” she added.
With the retail-client program, investors with $5,000 or more will be able to open individual, joint, IRA and revocable living trust accounts with automated portfolios that use Schwab and other ETFs. Automated tax-loss harvesting services will be offered for free for those investing $50,000 and up.
Like its rivals, Schwab management sees the offering as complementing rather than cannibalizing its advisor-driven business.