Charles Schwab Intelligent Portfolios Premium is a hybrid advisor service. It combines the automated digital financial advice of a robo advisor, with the touch of a human financial planner. If you look at Schwab's website, the terminology can sometimes be confusing.

Schwab offers what they call Intelligent Portfolios, which is just a robo advisor by itself. The "Premium" added onto it allows you to also get access to a human advisor as well. In other words, you use the robo advisor portion of the service to invest, and get advice from a human financial advisor for a broader financial plan - hence it is a hybrid advisor service.

The first step to using Intelligent Portfolios Premium is to fill out a questionaire through Schwab's website. The questionaire will ask you questions related to your investing goals, your knowledge of investments, and your risk tolerance.

Based upon your answers to these questions, Schwab's Intelligent Portfolios (the robo advisor portion) will recommend an investment portfolio that is best for you. Schwab builds these portfolios using low cost ETFs made up of a range of asset classes including stocks, fixed income, real estate, and commodities. Additionally, Schwab keeps part of your portfolio in a FDIC cash account.

After Schwab has recommended an investment portfolio for you, you can then choose what account you want to hold this investment portfolio in. Schwab offers both taxable accounts, such as brokerage accounts, as well as tax advantaged accounts such as IRAs.

Simply go through the steps to open your chosen account and then make the required initial deposit of $5,000 and you are done. Up until this point, all of this information has been related to the robo advisor portion of Schwab Intelligent Portfolios Premium. However, you may be wondering how you get access to a human financial advisor as well.

It's really simple. All you need to do is follow the steps above and deposit $25,000 into your account and pay a one time planning fee of $300. This will allow you to make an intial financial roadmap (plan) with a CFP (certified financial planner) from Schwab and have access to one on an ongoing basis. If you don't have $25,000 available, you can build up your account to that amount using the robo advisor portion of the service.

Standard brokerage accounts: A standard brokerage account simply allows you to hold the investment portfolio Schwab recommends for you. Schwab offers Individual, Joint Tenant with Rights of Survivorship, Tenants in Common, Community Property, and Custodial Brokerage accounts.

Retirement accounts: IRAs (individual retirement accounts) are designed specifically to help you save and invest for retirement, and often come with tax benefits. Schwab offers a Roth, Traditional, Rollover, SEP, SIMPLE, and Inherited IRA.
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Revocable living trust: A revocable living trust is a legal document that will determine how your assets will be handled when you die. As the name implies, you create a revocable living trust during your lifetime and can make changes to it during your lifetime as well. When you die, the assets in your trust are transferred to your beneficiaries. Schwab offers Single Trustee and Two Trustees revocable living trusts.

If you want access to both human and digital advisors, you will need $25,000 to use Charles Schwab's Intelligent Portolios Premium service. If you have at least $5,000 dollars, you can use the robo advising portion of the service and grow your account to $25,000 so that you can also gain access to the certified financial planners from Schwab.

Unlike other popular robo advisors, Schwab does not charge an advisory fee for their digital advice which is an advantage. Schwab does note that you will be charged the expense ratios on the ETFs that make up your recommended investment portfolio.

An expense ratio is a fancy term for a fee that is charged for operating and administrative costs. The expense ratios on the ETFs that Schwab uses typically average around 0.17%. This means you would pay a $0.17 expense ratio fee for every $100 you had invested.

While Schwab does not charge an advisory fee for their robo advisor portion of the service, they do charge a flat fee for the human advisor portion if you have met the $25,000 requirement. For the "Premium" portion of the service, Schwab charges a one time $300 fee and then a flat $30 per month fee after that.

Schwab's flat fee can be both good and bad. It really depends on your account balance. If you have a smaller account balance, the fees can be high when compared to a financial advisor service that charges you a percentage based fee. But if you have a high account balance, the fees can end up being lower than other services.

For example, if you were to invest the minimum amount of $25,000 the fees for the first year would be $660 (the one time planning fee of $300, as well as $30 per month.) This would be equivalent to a 2.64% fee for that year which is quite high when compared to other services.

However, if you stuck with the service and grew your account balance to $500,000, the fees charged for that year would be equivalent to a 0.072% per year which is lower than other advisor services. You can look at the chart below to get an idea on the fees you would pay depending upon different account balances.
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As of right now, Schwab's Intelligent Portfolios Premium advisors are only accesible via phone or video chat. When you want to meet with an advisor, you can schedule an appointment using Schwab's online scheduler. During your initial appointment after you have signed up, a CFP from Schwab will go over your questionaire you filled out and help you create a custom "Action Plan" to help you reach your goals.

After your intial consultation, you can set up a "check-in" appointment with an advisor if you have more questions. Schwab recommends meeting with an advisor at least once a year, but you have unlimited access meaning you can schedule an appointment whenver you need help.

Keep in mind that you are not guaranteed to meet with the same advisor each time. However, Schwab keeps a record of your action plan so that any advisor can assist you as needed. Schwab's advisors hold a CFP (certified financial planner) license which enables them to give you financial advice.

1. Robo Advisor

As we have already noted, the first thing you get with Intelligent Portfolios Premium is advise from Schwab's robo advisor (the Intelligent Portfolios part). The robo advisor has both good and bad parts to it. We like that Schwab does not charge an advisory fee which is uncommon when compared to other notable robo advisors.

Schwab does a good job on building a diversified portfolio for you. They say they can build 80 portolio variations by using 51 ETFs, 3 investment strategies, and 6 risk profiles. Additionally, Schwab does offer portfolio rebalancing and tax loss harvesting on balances greater than $50,000.

Portolio rebalancing simply means Schwab will keep the investments in your account at the ideal mix based upon answers you provided in your questionaire. Tax loss harvesting is a strategy in which investments are sold at a loss to offset taxes.

A few knocks against the robo advisor are the high account minimum and high allocation of cash in portfolios. An intial requirement of $5,000 to use a robo advisor is quite steep when compared to others in the industry. Additionally, there have been complaints that Schwab puts a high percentage of customers portfolios in cash.

In fact, Schwab had to shell out $187 million for misleading robo advisor clients about their cash allocation. This is not to say that Schwab's robo advisor should be avoided entirely, but make sure you look at how much of your portfolio Schwab is allocating towards cash. Some investors like a high cash allocation, but this can be a problem if you want all of your money to be invested.

2. Certified Financial Planner

Secondly, you get access to a team of CFPs from Schwab. The robo advisor portion of Schwab's service can help set up your investments, and the team of CFPs can help you create a big picture financial plan and answer any questions you may have. It is like a one, two punch.

We like the fact that Schwab does not limit you on how often you can speak with a CFP from their team. Phone and video chat are convenient options to meet with your advisor and help Schwab keep costs low for you. The main knocks here are that you are not guaranteed to meet with the same advisor each time and that there are no in person appointments offered.

3. Digital Planning Tools

Finally, Schwab does offer a suite of planning tools that you can use in tandem with the robo and financial advisor services to make sure you are on track to reach your goals.

Schwab Plan - This tool shows the probability of reaching your goals. When you first use the tool, you will fill out a questionaire that asks when you want to retire, how much you think you will need, and any current investments you have. Based upon your answers, Schwab will give you the probabillity of reaching your goals, as well as recommendations to increase that probability.

Play Zone - This tool allows you to "stress test" your plan. Using the tool, you can adjust things such as your retirement age, saving rates, and lifestyle choices to see how these changes could impact your overall financial plan.

Intelligent Income - This tool allows you to tell Schwab how much money you expect to have in retirement and how long you need it to last. Based upon the information you provide, Schwab will tell you how much you can withdraw per month and help you set up tax efficient withdrawals from one or all of the accounts you have with Schwab.

Charles Schwab offers phone, email, and live chat support 24/7. There is a specific line that you can call for Schwab's Intelligent Portfolios Premium service which is listed under the "contact us" tab on Schwab's website. Schwab also has in person branches, but since their Intelligent Portfolios Premium does not offer in person appointments, it is better to contact Schwab using one of the methods above.

Schwab Wealth Advisory

If you stick with Schwab and grow your account to $1 million, you can unlock Schwab Wealth Advisory. Unlike the Intelligent Portfolios Premium service, you will get a dedicated Wealth Advisor. Your Wealth Advisor is backed by the Schwab Wealth Advisory team, which is made up a financial professionals.

The Schwab Wealth Advisory service can help you with the following items - investment planning, retirement planning, tax planning, estate planning, risk management and insurance, banking and credit management, and education and family support.

According to Schwab, more than 95% of the 600 person Wealth Advisory team holds a professional designation in their area of expertise. Schwab charges a 0.80% annual fee on your first $1 million, but that fee can drop to 0.75%, 0.70%, and 0.30% as your account balance grows.
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More Advisor Services

If you don't want to use Intelligent Portfolios Premium or Wealth Advisory, you can use the Schwab Advisor Network. Schwab will refer you to a vetted local investment advisor if you have a minimum of $500k. Fees van vary by advisor. If you don't want a complete advisor service, you can look into Schwab's Managed Porfolios and Managed Account Select for investment guidance only.

1. Hybrid investing approach

As noted throughout the review, a hybrid investing approach can be an advantage. You get the low cost automated investing guidance of the robo advisor, with the personal touch of a certified financial planner. Although Schwab's Intelligent Portfolios Premium is not perfect, it does do a pretty good job at being a hybrid advisor.

2. Potential for low costs if you invest enough

Since Schwab uses a flat fee pricing model for this service, your costs can end up being quite low if you invest enough. Once your portfolio reaches $100,000 or more in value, the fees start to become quite low when converted to a percentage basis.

3. Unlimited CFP access and strong customer support

Unlimited access to the team of CFPs at Schwab is great knowing someone will always be there to answer your questions. Additionally, Schwab does have a good reputation for strong customer support and offers multiple ways to contact them.

4. Strong digital planning tools

The Schwab Plan, Play Zone, and Intelligent Income digital planning tools can further assist you in creating a financial plan and visually show you where you need to make changes or get help to reach your goals.

1. Potential for high fees on small account balances

If your account balance is on the smaller end that Schwab requires, the fees can end up being high when converted to a percentage basis. On a $25,000 balance, your fees would be equivalent to 1.44% per year. If you plan on sticking with Schwab for the long haul this is not a big deal as your fees will drop over time as your account balance grows.

2. High cash allocation

Schwab does allocate a higher than average percentage of portfolios to cash. Cash allocation can range from 6% to 30% of your portfolio depending on how it is built. You can use Schwab's historical perfomance tool to get a guage on how much of your portfolio would be invested in cash.

3. No tax loss harvesting until $50,000

Finally, Schwab does not start offering tax loss harvesting until your account balance reaches $50,000. This is not a huge knock, but it would be better if Schwab offered this right from the start as opposed to holding it back from you.

Charles Schwab Intelligent Portoflios Premium is right for you if: