The Charles Schwab Corp. plans to roll out a no-fee “robo” investing platform in the first quarter of next year.
Called the Schwab Intelligent Portfolios, the offering will have a $5,000 minimum and invest in both Schwab and third-party ETFs, the company said Monday.
Portfolios will be managed by Charles Schwab Investment Advisory Inc.
A white-label version for Schwab’s affiliated RIA firms will be available shortly after the platform debuts, Schwab said. A customizable version of the program for RIAs will allow independent advisors to use their own brands and modify asset allocations.
“Multiple pricing options will be available for these customized, white-labeled [RIA] versions, including an option with no platform or program management fee,” Schwab said.
The no-fee pricing could raise the bar for all competing automated investment programs.
Schwab’s robo offering “is going to stand apart in terms of its cost and value,” said Schwab CEO Walt Bettinger on a conference call with analysts Monday.
“We’re going to be able to offer Schwab Intelligent Portfolios without charging any fees for the portfolio advisory service,” he said. “There will also be no trading commissions, or account service fees.”
Schwab will earn revenue from its proprietary ETFs that may be selected in the program, as well as revenue-sharing deals from third-party ETFs that are currently in its no-transaction-fee ETF OneSource program.
“We think it will be a game-changing approach to this emerging area,” Bettinger said.
Meanwhile, TD Ameritrade Chief Executive Fred Tomczyk told Reuters that his company has no plans to release an automated investing model. He said purely online models will struggle to achieve scale.
Selection of ETFs in Schwab's program would be “done largely via criteria that would be used by an objective institutional investor,” Bettinger said.
Schwab's Intelligent Portfolios platform will offer ETFs covering 20 asset classes. It will include automatic rebalancing, and for portfolios of $50,000 or more, automated tax-loss harvesting at no cost.
Schwab is also promising live help “from investment professionals.”