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Does Charles Schwab Reimburse Account Transfer (ACAT) Fee?

Charles Schwab Refunds ACAT Transfer Fees

Unfortunately, Charles Schwab does not reimburse account transfer (ACAT) fee for moving a brokerage or IRA account from another brokerage company. As an alternative, TD Ameritrade will reimburse you for your current broker’s ACAT transfer fee up to $150.

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Charles Schwab Intelligent Portfolios Overview

With the constant introduction of new online platforms to save and invest including the rise of so-called “robo-advisors,” many investors find themselves unable to keep up with the latest fintech trends and wondering what value a robot might add to their portfolio. One entrant into this arena – Schwab Intelligent Portfolios – has dominated in part because of the backing of a major financial institution, Charles Schwab.

Charles Schwab Intelligent Portfolios Fees

Robo-advisors have been embraced by the fintech community for their ability to perform many of the same responsibilities as a human advisor at a much lower cost. In fact, Schwab Intelligent Portfolios is almost unique among its competition in that it charges no management fees or commissions to these automated accounts. Compare it to 0.25% at Betterment, or 0.75% at Swell Investing. The only major competitor is M1 Finance that also charges nothing.

How It Works

Intelligent Portfolios support both Traditional and Roth IRAs, custodial accounts and trusts, and non-retirement accounts and the process for getting started is pretty straightforward. You are asked a series of questions to gauge your goals and risk tolerance and then Schwab suggests a customized allocation mix that you are free to manually adjust at any time.

Schwab stands out in its more diverse selection of asset classes compared to its competition, offering stocks, bonds, real estate investment trusts (REITs), and securities in emerging markets among others for a total of 20 asset classes. Wealthfront only offers 11 classes while Betterment has 12. Like other services, Schwab checks for rebalancing opportunities daily, re-optimizing your allocation if any asset class significantly varies from its target proportion.

The Good

As mentioned, Intelligent Portfolios gives investors the choice to customize their portfolios based on risk tolerance and personal goals. However, instead of simply accepting the default portfolio based on these parameters, Schwab allows you to remove up to three funds, which it will replace with different investments. This adds a degree of flexibility unavailable at most other robo-advisory providers.

Schwab also offers a helpful goal monitoring feature that makes it easy to determine whether an investor is on target to reach a goal that may be decades away. Using robust Monte Carlo analysis, which calculates a large number of possible outcomes with varying rates of return, Schwab determines your likelihood of reaching your goal given your present account balance and rate of savings. After evaluating whether you are on target, at risk, or off target, Intelligent Portfolios recommends changes to increase your likelihood of success like updating your risk profile or making a one-time contribution.

Schwab also distinguishes itself by being an established player in the investing world and having the amenities of a larger institution that its startup rivals lack. Investors may visit any of the 300 locations nationwide, call a 24-hour hotline, or chat online with a service representative – directly from their investment dashboard – about any assistance they require. All Intelligent Portfolio holders are also provided with a complimentary Investor Checking account which allows unlimited, free withdrawals at any ATM worldwide and 100% reimbursement for any ATM fees incurred.

The Bad

Easily the biggest downside of Schwab Intelligent Portfolios is its significant, mandatory cash allocation. Depending on an investor’s risk profile, Schwab holds from 6% to a whopping 29.4% of your portfolio in a bank account, creating a “cash drag” as money that could be invested sits idle. Schwab argues that cash is a healthy part of a portfolio, as it explains in this blog post, but many critics point out a more obvious reason – that Schwab is able to earn revenue by lending out these reserves elsewhere. This mandatory cash allocation does fund the program and allow it to avoid charging other fees, but challenges the notion that Intelligent Portfolios is truly without cost.

Schwab Intelligent Portfolios also requires higher minimums than other services – both for overall minimum balance and its tax-loss harvesting feature. Its $5,000 minimum to open an account is markedly higher than Wealthfront’s $500 or Betterment’s impressive $0 minimum. Schwab offers similarly limited availability of tax-loss harvesting, a tool that allows tax savings by swapping out investments that have incurred losses with similar funds, offering it only to investors with over $50,000 in assets. Both Wealthfront and Betterment offer this service for all taxable accounts.

Charles Schwab Intelligent Portfolios Review Wrap-Up

Schwab Intelligent Portfolios is a compelling option for many investors seeking lower fees, greater convenience, and the experience offered by an established institution. Its impressive 24/7 access to customer support, high level of customization, and user friendly interface and goal monitoring make it an attractive choice.

Still, Schwab Intelligent Portfolios has significant limitations including high required cash allocation and higher minimums for opening an account or taking advantage of tax-loss harvesting. But for those who are comfortable with these features and eager to try the services of a “robo-advisor,” this one is a good bet.