The Charles Schwab Corporation provides a full range of securities, brokerage, banking, money management, and financial advisory services through its operating subsidiaries. It also has a broker-dealer subsidiary, Charles Schwab & Co. Although in business for decades, the company has kept up with the changing times: adopting new technologies including robo-advisors for their clients. Robo-advisors, however, are not what they sound like, but computer algorithms that build you a portfolio and manage your assets based on your goals and your tolerance for risk.
Schwab recently got into some legal heat due to their robo advisors. More specifically, Schwab, from March 2015 through November 2018, was failing to disclose that its robo-advisor allocated funds “in a manner that their own internal analyses showed would be less profitable for their clients under most market conditions” the SEC claimed. In response to this, Schwab has agreed to pay $187 million to settle an SEC investigation. This event raises questions about financial advisors, hidden fees, and how they all fit into the new era of fintech and innovations like Robo-advisors who have gained popularity since the ‘08 crash and may soon hold more than $1 trillion of Americans’ wealth.
What do you think about the allegations against Charles Schwab, and do you think robo-advisors are an innovation here to stay?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.