Schwab Intelligent Portfolio

[seed4great]

Did anyone use this tool from Schwab? It looks like a robo manager with no fees. Anything good for beginner investor? It would be nice, if anyone can share experience with it, or useful thoughts.

[Jack FFR1846]

Been talked about before. Their used ETFs are high fee ones. Big cash drag. I'm a Schwab customer and my take is "pass".

[seed4great]

OK, thanks for the opinion. I'll try to find if there was an existing discussion.

[mhalley]

The response to the intelligent portfolios has been lukewarm here. Vanguard pas and fidelity go get more favorable opinions I believe.

[dia]

When I went for a free complimentary visit as I was transferring $$ to Schwab, the rep HEAVILY pushed the Intelligent Portfolio. That made me wonder. I didn't go for it.

[Timon0201]

I am a Schwab customer and the minimum was so low that we put in $5k to see how it works and just kind of test it out. On a performance level, even though it's 60% stock, 10% cash, and 30% bond, it's performed as well as my 90% stock accounts. I like the robo part of it.

On a principal level, I believe they pick riskier bonds to make up the heavy cash and my friend who's an advisor says that the added risk isn't work the potential gain.

So in theory, probably not good, but performance has been good for me personally the last 2 years (although that's a blip in life). I keep wanting to close the account but end up that I keep putting a little each month.

[patrick474]

I think it can be a useful service if configured to the most aggressive allocation, which includes only a 6% cash allocation and no bond allocation. The cash drag can essentially be considered an advisory fee. If the cash allocation replaces bonds in your overall asset allocation, then this "fee" likely works out to 15-25 basis points. Of course, you'd have to figure out how to address your fixed-income allocation by some other means.

As compared to Betterment and the other larger robos, Intelligent Portfolios offers better exposure to small and value factors throughout the portfolio, although the costs of the funds making up the portfolio are overall higher than funds used by Betterment, et al. If the factor exposure is not important to you, there are many other options in the marketplace that offer similar benefits, such as tax-loss harvesting and automatic rebalancing.

[billthecat]

This is my approach and I welcome feedback.

• In my tax-deferred accounts (401k, Roth IRA), I use target date funds 15+ years out (normal retirement). This is 80/20 stock/bonds. This is about 20% of my wealth.
• In my taxable account, I use SIP. This is nearer term than the tax-deferred accounts (early retirement), so it's 37/47 stock/bonds, plus 2% commodities, 14% cash. This is new to me (a week), though, so I only have the minimum right now. If I put everything but my home equity (and tax-deferred accounts) into this, it would be 80% of my wealth.

Schwab defends their cash allocation as a stabilizing asset, which is true to an extent - I mean, that's inherent to it not being invested in anything. As a nearer-term bucket for me, I guess more cash makes sense. Of course, anyone can hold cash outside of whatever other investmetns they do (funds, ETFs, Betterment, etc., etc.). But on the other hand, many funds have cash too (less, though).

A simple solution is important to me, because my interest in dealing with this has waned (in no small part due to my poor track record).

[patrick474]

This is my approach and I welcome feedback.

• In my tax-deferred accounts (401k, Roth IRA), I use target date funds 15+ years out (normal retirement). This is 80/20 stock/bonds. This is about 20% of my wealth.
• In my taxable account, I use SIP. This is nearer term than the tax-deferred accounts (early retirement), so it's 37/47 stock/bonds, plus 2% commodities, 14% cash. This is new to me (a week), though, so I only have the minimum right now. If I put everything but my home equity (and tax-deferred accounts) into this, it would be 80% of my wealth.

Schwab defends their cash allocation as a stabilizing asset, which is true to an extent - I mean, that's inherent to it not being invested in anything. As a nearer-term bucket for me, I guess more cash makes sense. Of course, anyone can hold cash outside of whatever other investmetns they do (funds, ETFs, Betterment, etc., etc.). But on the other hand, many funds have cash too (less, though).

A simple solution is important to me, because my interest in dealing with this has waned (in no small part due to my poor track record).

I think the cash drag becomes a little too much at that point, and as pointed out elsewhere, their bond choices are weird. There are lots of options elsewhere that are more plain-vanilla and relatively low-fee, such as Betterment, Fidelity, and TD. Every firm/bank that markets to retail investors is going to have one before long. To me, SIP is a great way to get small and value tilts on an automated platform, but if you want a completely no-fuss approach and also want to incorporate your fixed-income allocation, there are better choices.

[wjmartin4]

Most of the brokers have added some form of robo-advisor for the smaller investors and to make sure they're not left out of the race. I still haven't seen much advertising about it besides the robo's like betterment