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Schwab Unveils 'Robo Advisor': No Fees for Investors, RIAs

Charles Schwab just unveiled its robo killer.

As part of a business update, CEO Walter Bettinger announced that its new online advisory platform would debut in the first quarter of 2015 -- with no advisory or asset management fees, no commissions and no account fees.

The service, to be called Schwab Intelligent Portfolios, will roll out to retail consumers first, Bettinger said. He added that a white-label version for RIAs will be available "shortly thereafter," but did not specify dates.

The online platform will include automated portfolio management, rebalancing and tax loss harvesting. It will include low-cost ETFs, with Schwab funds as well as outside products.

While Bettinger said that Schwab has "never been afraid to cannibalize parts of (the) firm," he suggested that Intelligent Portfolios was unlikely to be a direct competitor for Schwab's RIA custody clients.

"This is an online advisory, technology-enabled program," he said. "We believe that it will apply to a great extent to people who are less interested in other advisory solutions."

Schwab Advisor Services accounted for more than $1 billion as of the third quarter, the company noted -- almost 43% of Schwab's total assets.


The Schwab news is the latest salvo in the fight by traditional RIA players against the so-called robo advisors -- a group of online advisory service providers such as Wealthfront, Betterment and others. Assets directly managed by online advisory firms were as high as $3.7 billion in July, according to a Corporate Insight study.

Rival custodian Fidelity earlier this month announced that it would be offering a white-label version of digital advisory service Betterment to its RIA custody clients -- although such a deal appears to come with a cost to advisors. Fidelity practice management chief David Canter noted at the time the deal was announced that the firm would get "a business credit in the form of a referral fee" for every RIA firm that signs on with Betterment.

TD Ameritrade Institutional has not yet announced any similar arrangements, although TDAI technology solutions director Chris Valleley recently cited an online advisor platform by startup Trizic, which sits on top of TDAI's Veo technology and offers "model-based portfolio management, portfolio rebalancing, client billing and online account-opening," in a guest column for Financial Planning.

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