The world of low-cost, tech-driven advisory solutions officially has it latest entrant, one that's throwing its big brand behind the push to attract younger and fee-conscious retirement savers.
Charles Schwab has opened its Intelligent Portfolios platform to the retail market, calling it "Blue."
The firm's tech play won't be all digital, however. Customers will be able to talk to branch brokers or chat with call-center representatives.
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The managed component of the "robo" product will be available to accounts with as little as $5,000 in assets, the company said.
The San Francisco-based brokerage said it made 54 Schwab and third-party exchange traded funds and 27 asset classes available via the platform.
Based on investment goals and risk-tolerance levels, the technology invests clients' funds accordingly and automatically rebalances portfolios in conjunction with those established goals.
Naureen Hassan, whom Schwab tapped to head the new platform's rollout, said keeping costs low, having access to advice, and getting investors to stay invested are the key to investors' success.
Intelligent Portfolios "addresses each of these key components," she said in a news release, claiming the product moves costs to a "new low."
It's that latter claim that has some advisors concerned. While some have been dismissive of the robo movement, given its small representation of total assets under management, others say the downward pressure new technology is putting on fees will force advisors to rethink their price points.
MyPrivateBanking Research, a Switzerland-based consultancy, projects total robo assets to be around $14 billion, but expects that figure to reach $255 billion in the next five years. While still a fraction of the $5 trillion money managers oversee, the Swiss firm is one of those that sees the movement as a threat to traditional managers.
The reason largely has to do with fees. Paladin Research and Registry, a California-based firm that tracks advisory trends, puts that average robo fee between 26 and 65 basis points.
Some traditional managed accounts can charge up to 2 percent of assets after all expenses to the investor are considered.
Schwab's new platform will charge between 0.15 and 0.35 percent, as reported last year in Forbes.
In an effort to avoid cannibalizing assets in Schwab's own channel of RIAs, the firm also announced a version of the platform — Institutional Investment Portfolios — will be rolled out to RIAs next quarter.
Advisors will be able to incorporate a management fee into the platform, and add their own firm's brand around the technology.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
