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Schwab moves beyond millennials with new robo feature

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Robo advisors have a reputation for being millennial-friendly platforms made to grow wealth, but with its new retirement income feature, Charles Schwab is looking to attract retirees ready to start spending it.

The San Francisco-based discount brokerage — which recently said it would acquire competitor TD Ameritrade — is rolling out a new feature, dubbed Schwab Intelligent Income, for clients who want to plan withdrawals from their portfolio during retirement.

The new offering implements withdrawal strategies across taxable and retirement accounts, including tax-loss harvesting and portfolio rebalancing capabilities as money is taken out, according to Schwab. Clients will be able to see the probability of meeting their withdrawal goals and make adjustments to those forecasts.

The move echoes a larger trend in the tech industry, which is starting to move away from a sole focus on accumulating assets.

“As boomers hit retirement age, the investment industry is more focused than ever on tech-enabled products and solutions to address decumulation and retirement income,” says Rob Foregger, co-founder of NextCapital, which powers personalized retirement planning and managed account technology for financial services companies. He notes that about 10,000 baby boomers retire every day.

Slated to launch in January, Intelligent Income will be a free addition to its traditional robo advisor, Schwab Intelligent Portfolios, and its premium offering, which charges a monthly subscription fee and offers access to advice from CFPs.

Automatic income deposits can be set up either into a Schwab bank or brokerage account or an external bank account. Clients can make adjustments and halt withdrawals without penalty, according to the firm. The portfolios will be monitored, and clients will be notified if their monthly withdrawal rates are at risk based on market movements, Schwab says.

“Most services aimed at creating income for clients come with high costs, lack of flexibility, and long-term commitments,” Jonathan Craig, Schwab’s head of Investor Services, said in a statement. “Schwab Intelligent Income solves the complexity of doing it on your own and removes the friction inherent in other income services by providing a flexible, low cost, and smart way to generate a predictable paycheck from your portfolio.”


Most robos advisors cater to younger investors seeking to build wealth, not spend it, according to a report from the Pension Research Council, which pointed out that there is increasing interest in the decumaltion side of financial planning.

But Schwab isn’t the first to focus on clients ready to spend. Betterment offers an auto-withdrawal option for clients on its platform. Foregger’s NextCapital focuses on spend-down forecasting and decumulation of assets. IBM has even been working on its own solution for financial services firms to help with wealth decumulation, according to the company.

However, decumulation can be a challenge for RIAs. A major hurdle for any digital advisor is explaining the decumulation strategies available to clients, according to the paper. “Financial educators, including those who work for robo-advisors, face considerable challenges in explaining decumulation within a robo platform,” according to the Pension Research Council report.

The new robo feature will not be available for RIAs and their clients, according to the company.

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