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A Charles Schwab location in New York

Portfolio > Portfolio Construction

Schwab Soups Up Direct Indexing for RIAs

By Jeff Berman

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Registered investment advisor clients of Charles Schwab now have access to new digital experience and customization enhancements for Schwab Personalized Indexing, Schwab’s direct indexing solution that provides tax-loss harvesting and professional portfolio management, the firm said Thursday.

As a result, RIAs can now onboard clients with individual, joint tenant and many other account types more easily by digitally opening and funding new Schwab Personalized Indexing accounts on the Managed Account Access platform, as well as other separately managed account offers on the Managed Account Select and Managed Account Access platforms.

A key benefit of digital enrollment is that there are “fewer errors, faster processing and a more streamlined workflow experience for RIAs and their clients,” according to Schwab.

In addition to easier onboarding, a new account-level digital dashboard provides RIAs with data, including total realized gains and losses generated in accounts driven by proprietary tax-loss harvesting algorithms.

There are also now more ways to personalize. “RIAs can now exclude more individual stocks as well as entire industries and subindustries, in Schwab Personalized Indexing client accounts,” the company explained in a news release.

Schwab also created a predictive tracking error tool that it said guides the maximum number of exclusions.

Schwab Personalized Indexing, launched in April 2022, uses a combination of human oversight and technology.

Schwab Personalized Indexing has an account minimum of $100,000, which the firm says is “lower than most direct indexing offerings on the market which typically start at $250,000 or higher but at an account size that still provides the potential for tax benefits to the client.”

“At Schwab, we are constantly looking for ways to provide independent advisors with more investment choices for their clients and for opportunities to help them deliver personalization at scale with maximum ease,” Jalina Kerr, managing director of client experience at Schwab Advisor Services, said in a statement.

“Advisors have asked for direct indexing and we have delivered on that — and importantly, we will continue to enhance Schwab Personalized Indexing based on the evolving needs of RIAs and their clients,” Kerr added.

As of March 31, Schwab Asset Management managed about $835.9 billion on a discretionary basis and $34.3 billion on a non-discretionary basis.

(A Charles Schwab location in New York; Photo: Bloomberg)

Jeff Berman

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