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Schwab’s ‘Robo’ Service Nets $1.5 Billion In Six Weeks
FYI: Charles Schwab’s (SCHW) automated investment service is adding “hundreds of new accounts every day,” the brokerage’s chief executive said this week. Schwab’s chief executive officer, Walter Bettinger, unveiled some details about Schwab Intelligent Portfolios in a call with analysts on Thursday. The brokerage rolled out its so-called robo-advisor service in early March, or about six weeks ago. Regards, Ted http://blogs.barrons.com/focusonfunds/2015/04/24/schwabs-robo-service-nets-1-5-billion-in-six-weeks/tab/print/
The article says: " Schwab doesn’t charge advisory fees, trading commissions or other service fees. Instead, it funnels between 6% to 30% of investor money into cash; Schwab then earns interest on clients’ deposits"
I'll bet that that the auto-investor places a portion of clients' funds into Schwab's own ETF's. These are additional hidden fees that Schwab collects (in addition to a blatant conflict of interest). Do it yourself and get better funds with less fund expenses.
Admittedly making some possibly unfounded assumptions, $1.5B x 8.5% = $127.5M cash to lend, while making a few pence on the ETF management. Looks like a pretty good business plan to me, and, if they can only make 4.7% on the cash, they match the .4% management fee the other robos charge. Is this a great country, or what??
They give you the free lunch, but then you gotta drink the Kool-Aid. Darn.....
Comments
" Schwab doesn’t charge advisory fees, trading commissions or other service fees. Instead, it funnels between 6% to 30% of investor money into cash; Schwab then earns interest on clients’ deposits"
I'll bet that that the auto-investor places a portion of clients' funds into Schwab's own ETF's. These are additional hidden fees that Schwab collects (in addition to a blatant conflict of interest). Do it yourself and get better funds with less fund expenses.
They give you the free lunch, but then you gotta drink the Kool-Aid. Darn.....