Schwab is developing robo-adviser for retirees
Intelligent Income will help manage withdrawals across an investor's retirement accounts.
Charles Schwab is developing a new digital advice service that will help retirees automate and manage their income.
With Schwab Intelligent Income, investors can implement a monthly withdrawal strategy across taxable, nontaxable and Roth accounts in a tax-efficient manner.
Intelligent Income will account for required minimum distributions and include tax-loss harvesting and automatic portfolio rebalancing using Schwab’s robo-adviser Intelligent Portfolios.
Intelligent Income includes support from Schwab, or investors can work with a certified financial planner through Schwab Intelligent Portfolios Premium.
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The service also includes a digital dashboard that clients can use to check their portfolio and progress toward financial goals, make changes or receive alerts if their income is affected by market movements.
“The transition from diligent saving and investing to creating steady income from that portfolio can be overwhelming,” Jonathan Craig, Charles Schwab senior executive vice president and head of investor services, said in a statement. “Most services aimed at creating income for clients come with high costs, lack of flexibility, and long-term commitments.
“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,” Mr. Craig continued.
According to Schwab’s research, 72% of people who are scheduled to retire in the next five years are worried about running out of money, while more than half say they are overwhelmed by the task of determining how much they can spend in retirement or the tax implications of withdrawing from multiple accounts.
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While pre-retirees report being comfortable using technology to manage their portfolios, most digital advice products are tailored toward younger investors, said Tobin McDaniel, Schwab senior vice president of digital advice and innovation.
“More than half of our existing digital advice clients are over the age of 50, and Schwab Intelligent Income aims to solve the retirement income concerns that are so common for this population — from the difficulty of managing multiple income sources to the fear of running out of money,” Mr. McDaniel said in a statement.
Schwab is planning to launch the service in January. The company did not specify minimums or fees for Intelligent Income. Intelligent Portfolios requires a $5,000 minimum and carries no fee, while Intelligent Portfolios Premium has a $25,000 minimum and charges an initial $300 planning fee and a $30 monthly subscription.
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Schwab is not the only company looking to deploy digital technology to retirees. Fidelity is also planning a service in early 2020 to help defined-contribution plan participants withdraw from retirement accounts.
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