Charles Schwab today provided details for its Institutional Intelligent Portfolios, an automated investment management offering for registered investment advisors. The program is scheduled to launch in the second quarter.
The program is intended to provide a turnkey solution enabling advisors to serve Gen X and Gen Y clients who don’t qualify for an RIA’s full service offering in an efficient, profitable manner. Schwab posits the program is appropriate for people looking for a low-cost investment management solution but not a full wealth management engagement.
Institutional Intelligent Portfolios will offer advisors the ability to create a diverse set of custom portfolios for clients utilizing more than 200 exchange-traded funds and 28 asset classes across all major fund families using four strategies––taxable and IRA-specific portfolios, municipal bond portfolios or income portfolios.
The program allows advisors to overlay their own intellectual capital and allocation strategies on Schwab’s platform by designing specific strategies with specific portfolios for taxable and non-taxable accounts. Schwab technology will then handle the rebalancing for all accounts and tax-loss harvesting at no charge for accounts of at least $50,000.
Advisor asset allocation models will be required to maintain a 4 percent cash allocation to facilitate rebalancing and client billing. The money will be held in Schwab Bank, which is FDIC-insured and pays an indexed, market-based interest rate.
Advisors can private label the entire Institutional Intelligent Portfolios experience for clients by branding both the client website and the mobile app experience with their colors and logos. An advisor console will simplify the setup and maintenance of the platform for advisors.
One aspect of this offering that differentiates it from other similar offerings is the deep integration with other Schwab Advisor Services technologies. Advisors will be able to download data into their portfolio management and accounting systems.
Advisors who participate in Schwab OpenView Gateway will be able to integrate their data with third-party software providers, just like with any other brokerage account. Advisors will be able to access alerts and other information generated by the platform through either the console or Schwab Advisor Center.
Regarding pricing, advisors with $100 million or more custodied at Schwab receive the platform at no charge. Advisors with less than $100 million in assets will pay 10 basis points for the use of the platform.
Schwab says there’s a demand for robo, or automated programs among financial advisors. The company notes its research found that 56 percent of advisors believe that automated investment management solutions could supplement their current offering and help drive growth.