First-time investors set off a planning boom

Influx of new investors face decisions about how they want to get financial advice – for many the answer is part tech, part human


April 29, 2021

Last year brought us many firsts, from trying new sourdough recipes to figuring out how to teach kids at home. For millions, 2020 also marked the start of life as investors. Schwab research shows that 15 percent of the total number of investors in the US today began investing in 2020. And, this large and distinct new group does a whole lot more than stock trading. Most of them are also planners.

As with any new undertaking, new investors are faced with a dizzying array of choices for how they want to receive their financial advice. Fully automated? Guidance-driven? Often the answer is somewhere in the middle with tools that combine technology and the help of a human.

We sat down with Cynthia Loh, Vice President, Digital Advice and Innovation, and Amy Richardson, CFP® professional with Schwab Intelligent Portfolios Premium®, to talk about why investors need the best of people and technology.

Cynthia Loh   Amy Richardson

What do we know about the influx of new investors over the past year?

CYNTHIA: Two things strike me when it comes to trends among our own clients. First is the spike in use of digital solutions over the past year. Nearly 60 percent of all advice enrollments by household now come from one of our digital advisory services – Schwab Intelligent Portfolios®, which is fully automated, or Schwab Intelligent Portfolios Premium, which provides clients with a financial plan and unlimited access to a team of CFP® professionals in addition to an automated portfolio.

Second is an explosion in planning. Just within Schwab Intelligent Portfolios Premium, we’ve seen a 24 percent increase in financial planning appointments made with our team of CFP® professionals compared to the end of 2020. This illustrates the need for guidance among many new investors as well as existing investors becoming more engaged with planning.

What has your experience with new investors been?

AMY: I oversee a team of CFP® professionals who work directly with our digital advice clients, and something that stands out for me about newer investors is that they don’t simply want to be told what to do. They want to be involved with their finances, but by collaborating with professionals who can help make sure they’re thinking through everything. They look to my team to cover their blind spots.

At the same time, they’re looking for investing and planning experiences that are digital, efficient, and affordable. The combination of technology and human guidance is the best of both worlds for them because they have access to a financial plan through a digital dashboard, and a financial professional easily available by phone and video chat.

Where do you see things going from here?

CYNTHIA: Our study shows that first-time investors are hungry for advice and support. More than a third have a written financial plan, yet many lack expertise when it comes to understanding taxes and fees. Nearly all respondents (90%) say they want access to tools and information to do their own research and improve their investing skills. But, almost everyone (80%) says they still want to be able to access a professional for help and guidance.

We recently launched Schwab PlanTM, a free digital financial plan available to clients, and 25,000 people completed financial plans in just the first six months. We’re also looking broadly at areas like retirement, inheritance, and estate planning to figure out the best ways to use technology to meet investor needs.

When do investors typically prefer to speak to a person?

AMY: The prompts are usually one of two things: when something big is happening in their life, or when something big is happening in the markets. During volatile markets, the most powerful thing we can do is help reassure people. Sometimes it takes talking to a client to help affirm that doing nothing might be the best approach.

Clients also often come to us when they get married, have children, or buy a home. One client recently came to me because her family’s daycare costs were ending as her daughter started school. That was like getting an instant raise to her household’s monthly income, and she wanted input on how that money should be deployed. Over the past year, we’ve seen all kinds of life events – stimulus checks, job losses, people wanting to take advantage of the low interest rate environment. These conversations are always about more than dollars and cents.

One of the most gratifying times to support clients is when we can help them balance between working toward long-term financial goals and getting to enjoy short-term wins. Financial planning isn’t just about depriving yourself – it’s about enjoying life along the way. If you make it part of your plan and invest wisely, you should be excited to enjoy treats like a vacation. Finding that balance is the key, and it’s an area where the human part of the equation really shines.


We encourage you to read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures. Before you enroll, it's important you understand any and all costs, including the role of cash and the way Schwab earns income from the cash allocation in your portfolio, which will affect performance, and how Schwab and its affiliates work together.

Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® are made available through Charles Schwab & Co., Inc. ("Schwab"), a dually registered investment advisor and broker dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. ("CSIA"). Charles Schwab Investment Management, Inc. ("CSIM"), the investment advisor for Schwab Funds, receives management fees on Schwab ETFs. Schwab, CSIA, and CSIM are affiliates and subsidiaries of The Charles Schwab Corporation.

Schwab Intelligent Portfolios, has no advisory fee and doesn't charge commissions, and Schwab Intelligent Portfolios Premium, offers financial planning for an initial fee of $300 and a $30 per month advisory fee charged quarterly after that.

Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

Investing involves risk, including loss of principal.