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Charles Schwab Wealth Management Review


2024 Charles Schwab Wealth Advisory review: Personal Wealth Management fees, pros and cons, performance, account minimum investments. Is it a safe and legitimate firm?


Schwab Wealth Management Review


Charles Schwab does more than just self-directed trading (or investing, for that matter). This holistic financial-services company has a very extensive investment-advisory unit that offers several managed account programs that come with a wide range of services.


Regulation and Protection of Schwab’s Managed Accounts


Schwab offers investment-advisory accounts through multiple subsidiaries. These include Schwab Wealth Advisory, Inc., Charles Schwab Investment Management, Inc., and Charles Schwab Investment Advisory, Inc. These departments of Schwab are all registered as investment advisor firms with both FINRA and the SEC.

Assets in advisory accounts with any Schwab unit are held with Charles Schwab & Co., Inc., a registered broker-dealer. Schwab uses its own clearing firm for its managed accounts. These two firms themselves are also registered with FINRA and the SEC.

It sounds like a lot of organizations. It’s not really important which business unit is holding which account. Just remember they are all under the same roof, and they are all subject to the same regulations. Schwab’s advisory accounts are also insured by the SIPC up to that group’s policy limits. That is important.


Schwab Wealth Advisory Review


The first managed-account option we will look at is the Wealth Advisory program. This setup requires $1 million in assets and charges 0.80% on the first million. It begins dropping after a million dollars in assets and reaches 0.30% for balances above $5 million. This pricing plan is quite inexpensive judged by industry standards, although the minimum deposit requirement is rather high.

The Wealth Advisory program operates on a non-discretionary basis, which is one reason the fee is so low. A non-discretionary basis means the attached investment advisor representative won’t place any trades in the enrolled account. Rather, the account owner bears ultimate responsibility for placing trades in the account. The Schwab financial advisor will make investment recommendations, however.


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Schwab clients who do opt for the Wealth Advisory service will receive help with a wide variety of financial issues. These include retirement planning, goal setting, asset preservation, tax-smart investing, a personalized financial plan, education funding, estate planning, and more.


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Specialized Investment Solutions


Schwab offers a variety of specialized advisory services. Some of these are discretionary accounts, which, as we saw above, are not available through the Wealth Advisory program. A specialized investment solutions account will have a dedicated investment advisor representative attached to it to assist with financial planning and related needs.

Although there are too many specialized programs to create an all-inclusive list, here are some examples:

Schwab Managed Portfolios™:

Through this setup, Schwab offers both discretionary and non-discretionary accounts. In either variety, the program offers portfolios of ETFs and mutual funds that themselves invest in commodities, bonds, foreign and domestic equities, and real estate securities. The minimum investment amount is $25,000, much less than the Wealth Advisory program requires.

The annual management fee ranges from 0.90% to 0.20%, depending on account balance and whether the account is invested in ETFs or mutual funds (mutual fund accounts have slightly lower rates above $150,000). The yearly asset-based fee is in addition to the expense ratios of the funds traded.

Schwab Personalized Indexing:

Schwab clients who want to incorporate environmental, social, and corporate governance (ESG) strategies into their investment regimens should consider this program. An ESG portfolio is available at no additional charge, and so is a tax-optimized portfolio. The default investment choices are:

- Schwab 1000 Equity
- MSCI EAFE International
- S&P SmallCap 600®
- MSCI KLD 400 Social

Obviously, this would be a good option to gain exposure to small-cap and global stocks. The Personalized Indexing program would also be a good way to capture a low fee; it’s only 0.40% on the first $2 million invested. The minimum to get into the program is $100,000.

ThomasPartners® Strategies

An investment-advisory program Schwab offers that is designed for retirement planning is ThomasPartners Strategies. It is available in two varieties, dividend growth and balanced income. In either setup, the account will strive for monthly income and total return over time.

ThomasPartners Strategies requires $100,000 to begin. The annual management fee is 90 basis points for the dividend strategy and 80 for the balanced income setup (for the first $500,000). It goes down from there.


Schwab Advisor Network®


Another option for investment management through Schwab is the company’s advisor network. This is a collection of local third-party financial planners who have been prescreened by Schwab. They are not Schwab advisors, although they are recommended by Schwab.

The exact pricing, products, and services through this channel will depend quite heavily on the investment professional chosen. Possible services include:

- Tax planning
- Insurance advice
- Estate planning
- Charitable giving
- Portfolio management
- Customized financial plan
- Coordination with other financial professionals
- Discretionary managed accounts

There is a $500,000 minimum deposit requirement to get into this program. Schwab charges nothing for its referral service, although the selected financial planner most certainly will.


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Schwab Intelligent Portfolios®


Investors who don’t need the cornucopia of financial services available through one of Schwab’s old-school managed accounts may want to consider Schwab Intelligent Portfolios. This is the company’s automated-investing service. While it is a managed account, it doesn’t have any of the standard financial-planning services available with other advisory accounts. In return, Schwab is able to reduce the minimum investment amount to just $5,000 and the asset-based fee all the way to 0.00%.

The service is free because Schwab allocates a portion of each robo account to cash (a maximum of 30%, which is pretty steep). Some of the ETFs enrolled in the program are Schwab funds, and the expense ratios incurred on these funds will earn income for Schwab.


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Despite the low cost, Schwab’s robo service is able to perform rebalancing and tax-loss harvesting.


Schwab Intelligent Portfolios Premium®


There’s one final program that is a middle ground between the robo service and the full, traditional advisory setup. This is Intelligent Portfolios Premium, a hybrid program. An account opened through this channel will be managed by Schwab’s computer algorithm and will receive financial planning from an actual human investment advisor.

Of course, this service is more expensive than the pure robo program. The cost is $30 per month plus a one-time planning fee of $300. The minimum initial investment amount is $25,000.


Opening a Managed Account


An Intelligent Portfolios or Intelligent Portfolios Premium account can be opened online, which simplifies the process quite a bit. Any other advisory account opened through Schwab will need to be opened with the help of a financial planner. It’s easy to find one at one of Schwab’s 300+ branch locations. It’s also possible to reach a financial advisor over the phone at (855) 966-3713.

An account with Schwab’s advisor network will need to be opened through a local financial professional. There are thousands of potential offices throughout the United States.

The number of possible account types is quite high, although not all account types will be available at all firms or in all programs. Here are some account types that are available in some advisory programs at Schwab:

- Individual and joint taxable
- Trusts
- IRAs (including SEP IRAs and SIMPLE IRAs for small businesses)
- Custodial accounts


Customer Support


Normally, a human-managed account will receive customer service through the attached investment advisor representative. Robo accounts will receive service through Schwab’s regular customer service department, which is open 24 hours a day, 7 days a week. Traditional advisory customers can also call into this number.

Accounts of all types (with perhaps the exception of advisor network accounts) can be managed and monitored through Schwab’s very good website and mobile app. There are trading tools for non-discretionary accounts that are quite easy to use, and Schwab offers a great deal of learning resources on its website that explain how to use such trading software. Other resources include online chat, document download, and account balance details.


Margin


Using borrowed funds for investment purposes is possible in some advisory accounts at Schwab. The exact cost and details should be discussed with the account’s financial advisor.


Recommendations


Mutual Funds: Schwab creates and manages its own suite of mutual funds, and many of these will be available to advisory clients. It’s also possible to find these funds and funds from other fund families through a self-directed account at Schwab or another brokerage firm, and this method will likely result in the largest number of funds. A self-directed account with Schwab is certainly a good place to invest in mutual funds.

Beginners: Any advisory account through any Schwab channel would be a good start.

Small Accounts: As already seen, most of Schwab’s managed accounts have steep minimums. Its robo account has a $5,000 minimum, which we don’t consider low. We suggest a self-directed account at Charles Schwab, which has a $0 minimum.

Equity Trading: Some of Schwab’s managed accounts offer trading in stocks. The best equity experience will probably be found with a self-directed account combined with StreetSmart Edge desktop platform.

Long-Term Investors and Retirement Savers: An investment-advisory account through Schwab, preferably one with a human financial planner, would be a good pick.


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Schwab Wealth Management Review Judgment


Charles Schwab has a very extensive lineup of investment-advisory accounts that are sure to please almost anyone. Because there are so many packages available, prospective clients should know exactly what they are signing up for before they...well...sign up.


About the Author
Arthur Chachuna is a professional personal finance blogger, and the owner of Brokerage-Review.com. He has been an avid investor for 25 years, and has a background in both applied math and programming.