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View More Press Releases by Charles Schwab Corporation

Press release:

Schwab Announces Launch of Schwab Intelligent Income™ to Modernize How Investors Can Pay Themselves From Their Portfolios

Issued by: Charles Schwab Corporation

Date: Dec. 20, 2019

SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab today announced the upcoming launch of Schwab Intelligent Income, an income solution designed for people who want a simple, modern way to pay themselves in retirement, or any other time, from their investment portfolios. Schwab Intelligent Income will help answer critical and often complex income-related questions about how much to withdraw, how to invest based on individual goals and time horizon, and how to withdraw from a combination of taxable, non-taxable, and Roth accounts in a tax-smart and efficient way. Schwab Intelligent Income is expected to launch in January 2020.

“The transition from diligent saving and investing to creating steady income from that portfolio can be overwhelming,” says Jonathan Craig, Charles Schwab senior executive vice president and head of Investor Services. “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.”

Managing Income Needs

While Schwab Intelligent Income can help investors with a range of short- and long-term income goals, it will meet a significant need for the millions of people planning to retire who view the process of managing income as complicated and cumbersome. According to new Schwab research, people within five years of retirement are overwhelmed by:

  • Running out of money in retirement (72%)
  • Determining how much they can spend in retirement (57%)
  • Managing the tax implications of withdrawing from multiple accounts (54%)

In fact, pre-retirees are more overwhelmed by these retirement income-related concerns than classic financial challenges like paying for college (27%), buying a home (33%), and losing a job (41%).

Overcoming Retirement Income Complexity

Schwab Intelligent Income will use the firm’s automated investing service Schwab Intelligent Portfolios® for portfolio management. For no additional fee, Schwab Intelligent Income will project, manage and automate multiple retirement income streams with a unique range of features including:

  • Intelligent, tax smart approach that will implement a withdrawal strategy across taxable, IRA and Roth IRA accounts, Required Minimum Distribution considerations, tax-loss harvesting, dividends, and income, as well as automatic portfolio rebalancing back to an investor’s target asset allocation as money is distributed from the portfolio.
  • A real-time digital dashboard that will enable investors to easily view their portfolio, recurring withdrawal, and the probability of meeting their withdrawal goal, with the flexibility to forecast and make changes based on their income needs.
  • Guidance tailored to generating a predictable monthly withdrawal based on an investor’s specific financial situation, delivered through a customized, tax-efficient and low-cost automated approach that keeps investors on track. Live support from Schwab investment professionals is available 24/7/365.
  • Automatic income deposit into a Schwab High Yield Investor Checking® account (linked to a Schwab One® brokerage account) or any other external bank account.
  • Flexibility to stop, start, and adjust the withdrawal amount, frequency, and deposit location without penalty.
  • Ongoing monitoring and alerts that will assess real-time portfolio performance against plan and notify clients if their monthly withdrawal rate is at risk based on market movements or other factors.

For those who want a comprehensive financial plan and unlimited guidance from a CERTIFIED FINANCIAL PLANNER™ professional, Schwab Intelligent Income will also be available together with the premium version of the firm’s digital advisory service, Schwab Intelligent Portfolios Premium™.

“So much of the focus in digital advice has been on developing tools for younger generations, but those closer to retirement are very open to using technology – in fact, 73 percent of pre-retirees tell us they’re comfortable using technology to manage their retirement income,” says Tobin McDaniel, Charles 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.”

To enroll in Schwab Intelligent Income, investors will answer a short set of questions that assess their financial situation, time horizon and risk tolerance, and then the tool will recommend the appropriate strategy across their taxable and retirement accounts. The portfolios are comprised of low-cost exchange-traded funds (ETFs) from Schwab and third-party providers including Vanguard, iShares and Invesco.

Schwab Intelligent Portfolios has a $5,000 minimum and charges no advisory fee. Schwab Intelligent Portfolios Premium has a $25,000 minimum and charges an initial one-time $300 fee for planning and a $30 monthly subscription ($90 billed quarterly).

Just as if they had invested on their own, clients in Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium pay the operating expenses on the ETFs in the portfolio, which includes a combination of Schwab ETFs™ and funds from third party providers. Based on a client’s risk profile, a portion of the portfolio is placed in FDIC-insured deposit accounts at Schwab Bank.* Some cash alternatives outside of the program pay a higher yield. See additional cost information below.

Schwab Intelligent Portfolios Premium also features a Satisfaction Guarantee, which states that if a client is not completely satisfied for any reason, Schwab will refund any related fee or commission and work with the client to make things right.

More information about Schwab Intelligent Income is available here.

About the Research

The research was conducted through an online survey by Logica Research from June 27 to July 16, 2019, among a national sample of 1,000 Americans aged 55 and older with $100,000 or more in investible assets. Respondents self-defined as retired or within five years of retirement. The margin of error for the sample is three percentage points.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com.

View More Press Releases by Charles Schwab Corporation


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