Building solutions to meet more needs

December 29, 2019 Jonathan M. Craig
Jonathan Craig discusses how clients need to live off their hard-earned money BUT also need flexibility to change as their life situations change.

When I was Chuck’s chief of staff more than a decade ago, one of the things he often talked about was the need to create a simple, low-cost way for clients to create a paycheck from their portfolio.  The ask was simple:  How do we make it easy for clients with taxable and nontaxable accounts start to sell their principal in a disciplined, tax-smart way. And most importantly, do it in a way that didn’t require high costs or lock their money up. The insight was clear. Clients need to start to live off their hard-earned money BUT they also need flexibility to change, start or stop their paycheck as their life situations change.  It was also critical that we built something that encouraged the client to stay invested so they could continue to benefit from the market.

I remember saying that conceptually this was easy to build. The challenge was scaling it, automating it, and ensuring commissions (transactions costs) didn’t unnecessarily raise the costs for clients.  In typical Chuck entrepreneurial fashion, he said: “if it’s easy, let’s build a prototype.” So we built a simple, Excel-based version that managed one account to share with our leadership. 

With the launch of Schwab Intelligent Income, we are bringing that simple idea to life with a sensible and practical solution for our clients. Since the prototype, we’ve been building the building blocks over the years. This solution is made possible by many things, including the launch of low-cost Schwab ETFs, the launch of Schwab Intelligent Portfolios, our automated investing service, and the elimination of commissions. All three of these significant industry milestones helped pave the way for this product.

Our new solution, Schwab Intelligent Income, uses our automated investing service for portfolio management, and for no additional fee* it projects, manages and automates income generation from one or multiple enrolled accounts. Investors also have the flexibility to start, stop, or adjust withdrawals at any time with no penalties. Schwab Intelligent Income answers investors’ questions like “how much can I afford to withdraw each month?” We can help them do that in a tax-smart way across various accounts. Even better: If you have questions, you can call us and ask.

Designing, building and launching the Schwab Intelligent Income solution required team collaboration from across Schwab. It’s another example of Schwab’s mission to drive complexity and cost down and create simplification and confidence in all aspects of investing.