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Home > Blog > Schwab Causing Controversy with New Investment Service for the Frugal

Schwab Causing Controversy with New Investment Service for the Frugal

Charles Schwab is set to introduce Schwab Intelligent Portfolios a FREE investment service for consumers wanting low-cost personalized advice but with minimal money to invest. Schwab will potentially trounce the competition given its established brand name and size.

Schwab is following the lead of a few smaller firms in regards to automated investing. Wealthfront, which has collected $2 billion in customer assets over its three-year existence, largely from people under 35, and Betterment, which has collected $1.55 billion since it opened in 2010. These smaller companies provide service to people with thousands, not millions, to invest and little to spend on investment advice. A unique service that is in high demand.

Naureen Hassan, an executive vice president of Schwab, says that “Schwab wanted to create a product that would appeal to the masses and get more people into well-diversified portfolios,” she said. Although the program does not officially become available to customers until later this month, its federal regulatory filing and website contain many of its details.

The major source of criticism in the service lies within the allocation of cash recommendations and with how the portfolios are constructed. The cash allotment will often be larger than many financial advisers recommend. For more information about Schwab’s new service click here

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