The program, which will be marketed as Schwab Intelligent Portfolios
to retail investors and independent investment advisers, will create
portfolios of exchange-traded funds managed by Schwab and other
In offering the service without management, transaction or account
service fees, Schwab intends to be "disruptive" to competitors that
have rapidly been introducing "rob o-adviser" platforms that charge
fees of about 0.25 percent of money invested, Schwab officials said
in a conference call with analysts and investors.
Reuters reported Schwab's plan to introduce a free rob o-program on
Schwab said it can make money through fees from managing and
servicing underlying ETFs and from investing client cash in the
portfolios. While the portfolios could draw investors who use
conventional Schwab accounts or hire advisers who trade through
Schwab, the company is not afraid of "cannibalizing" its own
revenue, executives said.
The service will appeal primarily to Schwab's traditional
self-directed investors who do not want to use its fee-based advice
programs, Chief Executive Walt Bettinger said.
He would not name specific competitors Schwab expects to undermine,
but said they range from independent firms that offer only automated
programs, to "wire houses," a reference to large full-service firms
such as Merrill Lynch, Morgan Stanley and UBS AG's U.S. brokerage
[to top of second column]
"This has the potential to create impact across the entire market,"
(This version of the story was corrected to change date in headline
to 2015 from 2014)
(Reporting by Jed Horowitz; Editing by Dan Grebler)
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