Charles Schwab’s improved digital financial planning tools place the firm’s user experience “on par” with leading independent automated advice platforms or so-called robo advisors Wealthfront and Personal Capital, according to “The Robo Report,” released by Backend Benchmarking. The rise in rankings for Schwab is a signal that the firm’s strategy around its robo—notably its move to subscription pricing and the bolstering of its digital financial advice for smarter decumulation of client assets in retirement—is mirroring, and may shift, the services of human financial advisors—particularly those deeply engaged in financial planning.
Financial planning tools provided by Wealthfront, Personal Capital and Schwab “can handle complex, multi-goal plans that show users the interaction of all their goals in a single, unified plan,” noted the report. Previously, independent robo advisors had a leg up on competitors like Schwab, but that is no longer the case, according to the report’s analysts.
Last year’s rework of Schwab’s financial planning experience and its introduction of digital tools related to retirement are significant steps. With goal-based options like starting a business, leaving an inheritance and anticipating health care needs, Schwab is pushing the boundaries of the typical retirement, home and college savings goals offered by many digital financial planning services. Schwab’s integration with Envestnet | MoneyGuide adds to its direct-to-consumer financial planning abilities, and it is backed by an option to interact with a human financial planner—in contrast to Wealthfront, which is increasingly alone in resisting the trend to connect clients to human help.
While Schwab has improved its digital financial planning, its decision to purchase TD Ameritrade muddied the waters for the latter’s robo products, which received an honorable mention for "best overall robo." The pending merger should trigger caution for investors considering TD’s automated investing products, Essential and Selective Portfolios, noted the report’s analysts. “We suggest that clients shopping for a new provider hold off on selecting Essential or Selective Portfolios until there is more visibility into how the integration with Schwab will be handled,” Backend noted in its report.
Overall, Fidelity Go and Vanguard received accolades as the quarter’s best overall robo advisor. Axos Invest, formerly branded as WiseBanyan, and Fidelity Go received recognition for their performance compared to cost.