Portfolio Management January 19, 2017


    When you manage your money through an automated investing platform, also known as a robo advisor, you may think you’re putting your financial faith in a computer program.

    But the intelligence behind Schwab Intelligent Portfolios® is anything but artificial. In fact, human experts play key roles in every aspect of the service. For example:

    • Our investment experts with Charles Schwab Investment Advisory, Inc. have designed portfolios with different mixes of stocks, bonds, commodities and cash to meet the needs of investors with different goals and risk tolerances.
    • These experts also scour the universe of low-cost exchange-traded funds (ETFs) to find those that best represent each asset class at the lowest cost for client portfolios.
    • Our trading experts evaluate liquidity, sentiment and competing trading platforms, while carefully ensuring that trades are made properly during times of market turbulence.
    • Our technology experts continually monitor, test and enhance the platform.

    Here's a quick look at how high-touch meets high-tech.

    Our experts are listening

    Schwab Intelligent Portfolios starts with Schwab investment professionals, who provide guidelines for sound allocation across and within all the major asset classes.

    Our experts cull from thousands of ETFs to select those for the program that best represent each asset class at the lowest cost.

    A highly sophisticated computer algorithm developed by our technical experts takes potential clients' answers to our Investor Profile Questionnaire about their personal goals, time horizon and risk tolerance—and recommends a suitable portfolio for their accounts. Each portfolio can include up to 20 asset classes to ensure appropriate diversification.

    Day-to-day trading oversight

    Similarly, when it comes to daily operations and oversight of the platform, our people and our technology work hand in virtual hand.

    Portfolios are automatically checked each day for potential rebalancing and tax-loss harvesting opportunities, creating a list of recommended trades across all client accounts. Then our human traders review the list to ensure it is in order—and check to make sure markets are operating as they should—before executing the trades. This human oversight is important in all market environments, and can help ensure smooth trading when markets become volatile.

    Some people mistakenly believe that the automation of Schwab Intelligent Portfolios means that a computer simply implements trades without a guide, which may lead to trades being executed even if markets are unstable. However, Schwab Intelligent Portfolios uses this combination of technology and human oversight designed to trade client portfolios efficiently, regardless of market conditions.

    Even under normal market conditions, our traders evaluate liquidity, sentiment and competing trading platforms. And if a severe market dislocation warrants it, we can delay or halt trading completely.

    Expert input at every step

    The human touch is invaluable to administering Schwab Intelligent Portfolios, and it shows in the remarkable confidence investors have placed in the platform: The service has amassed more than $10 billion in assets under management since its launch in March 2015.

    The bottom line: Savvy investors can't live by technology alone. Combining sophisticated computing power with human experience, expertise and judgment makes Schwab Intelligent Portfolios a truly smart choice.

    (0117-SHL0)


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