Schwab’s $200 million charge points toward conflicts with cash spreads
Cash spreads are certainly nothing new, but with almost $64 billion in assets, Schwab is likely the largest robo-adviser to hold significant chunks of client assets in cash.
July 21, 2021
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They say there’s no such thing as a free lunch, but Charles Schwab & Co. could have customers believing otherwise.
The discount brokerage’s Intelligent Portfolios platform has long advertised itself as having no advisory fees or commissions, but a $200 million charge announced this month relating to an investigation by the Securities and Exchange Commission highlights the subtle ways free investment platforms charge for services. While the robo-adviser doesn’t technically have an advisory fee, it does earn revenue through charging for its underlying exchange-traded funds and on interest collected on holding clients’ assets in cash.