Exclusive: Schwab robo-adviser crosses half-billion dollar mark

Retail investors respond in large numbers to the Intelligent Portfolios offering

Mar 30, 2015 @ 1:51 pm

By Trevor Hunnicutt

The Charles Schwab & Co. robo-adviser has crossed a symbolic threshold in just three weeks, raising more than half a billion dollars, the San Francisco-based firm told InvestmentNews on Monday.

Schwab spokeswoman Alison Wertheim said the Intelligent Portfolios program has raised “considerably over” $500 million in assets. The platform formally launched to significant fanfare March 9.

Marketing for the program since then has included advertisements in New York City subway stations and television spots during the NCAA college-basketball tournament, to name a few.

(More: Schwab 'robo-adviser' bets big on cash and 'smart' beta)

Schwab has said a “white-label” version of Intelligent Portfolios will be launched during the second quarter this year.

“The responses we are receiving from advisers indicates significant interest on their part,” Ms. Wertheim said.

Ms. Wertheim declined to comment on how many of the assets came from existing clients.

“It’s pretty phenomenal,” said Matthew Fronczke, director of product consulting and research at kasina. “The $500 million, no matter where it’s coming from, shows that, at least at the onset, the market is looking at this as a solution.”

Mr. Fronczke, whose consultancy has not worked on Intelligent Portfolios or on competitors’ platforms, said it took other robo-advisers years to raise the same amount of money as Schwab did in weeks. But he said that Schwab would not have entered the marketplace as quickly or competitively if not for firms such as Betterment and Wealthfront.

Meantime, some advisers have questioned Schwab's use of mandatory allocations to cash in the program.

Intelligent Portfolios places investors into a portfolio of index-tracking exchange-traded funds and cash. It does not charge a management fee on top of the underlying investments for retail investors.

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