A unique approach that combines retirement savings features in a single offering
Studies indicate that there are two keys to better results: cost and advice. That’s why we’ve combined low-cost1 index funds, built-in independent third-party investment advice services,4 and a personalized saving strategy in a single offering—Schwab Index Advantage®.
Schwab Index Advantage offers an array of index investments for plan sponsor selection from the industry’s largest fund providers.
- Index mutual funds available now; ETFs available soon2
- Variety of equity sizes, styles, and geographies, as well as fixed income and other asset classes
- Intended to track established market indices
- Deposit feature offered through Charles Schwab Bank for capital preservation
- FDIC insurance at participant level up to $250,000
- Daily liquidity
Employees in Schwab Index Advantage have access to independent third-party investment advice services that provide them with:
- Allocation of plan assets to a portfolio based on the funds available in the plan and each employee’s personal circumstances
- Diversification of their investments
- Automatic quarterly rebalancing when needed
- Portfolio realignment every year
At the sponsor’s direction, the plan can also include a self-directed brokerage feature, the Schwab Personal Choice Retirement Account®.6 Employees with the time, interest, and knowledge to manage the investments in their retirement account can access this feature, which offers:
- The freedom of a brokerage account in their 401(k)
- Thousands of investments available through Charles Schwab & Co., Inc.
- Premium research and tools
And participants always have the choice to manage on their own from among the investment options made available by the employer.
Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000. Please read the prospectus carefully before investing. Past performance does not guarantee future performance.
1 For illustrative purposes only. The definition of "low cost" is based on Schwab’s research using (1) 2010 data from 195 defined contribution plans serviced by Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company, and (2) 2010 data from a comparison set of plans serviced by other providers. In this comparison set, the weighted average operating expense ratio (OER) for midsize plans ($20 million-$100 million) using actively managed funds was $55 to $95 per $10,000 invested, and for large plans ($100 million-$350 million) the OER was $50 to $75 per $10,000 invested. For similar-sized plans adopting Schwab Index Advantage, the weighted average OER for index mutual funds or ETFs should be about $15 to $20 per $10,000 invested. This example does not include any fees associated with professional, independent advice services or other fees that may be charged to a participant account.
2 Product requires that plan sponsor select three proprietary Schwab Funds (Large Cap Blend, Small Cap Blend, and Foreign Large Cap Blend) as part of the five required asset classes in the plan’s fund lineup. The FDIC-insured deposit feature is also required. Index-based exchange traded fund product (ETF) is not yet available.
3 Schwab Bank Savings is a money market deposit account (“MMDA”) at Charles Schwab Bank (“Schwab Bank”). An MMDA is a type of savings deposit. Schwab Bank Savings is available only in select retirement plans serviced by Schwab Retirement Plan Services, Inc. Funds deposited in the MMDA at Charles Schwab Bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 when aggregated with all other deposits held by a plan participant in the same capacity at Schwab Bank. Participants are responsible for monitoring the total amount of deposits that they hold with Schwab Bank, in order to determine the extent of deposit insurance coverage available to them on their deposits, including the MMDA. Participants may generally move funds into and out of the savings account at any time; however, federal regulations require Schwab Bank to reserve the right to require seven (7) days’ prior notice before allowing a withdrawal or transfer of funds from the savings account.
4 Schwab Retirement Planner™ provides participants with a retirement savings and investment strategy, a major component of which is a discretionary investment management service furnished by GuidedChoice Asset Management, Inc. (“GuidedChoice®”) or Morningstar Associates, LLC (“Morningstar®”), each an independent, registered investment advisor. Using investment alternatives available in the plan, GuidedChoice creates discretionary managed portfolios based on modern portfolio theory, and Morningstar creates discretionary managed portfolios based on human capital methodology. GuidedChoice and Morningstar are not affiliated with or agents of Schwab Retirement Plan Services, Inc. (“SRPS”), Charles Schwab & Co., Inc. (“CS&Co.”), or their affiliates. Neither CS&Co., SRPS, nor their affiliates supervise, make recommendations with respect to, or take responsibility for monitoring the services provided to participants by GuidedChoice or Morningstar. Schwab Advice Consultants, who are employees of CS&Co. and not of GuidedChoice or Morningstar, facilitate participant access to the GuidedChoice or Morningstar services, but do not provide investment advice or recommendations regarding the GuidedChoice or Morningstar services or generally as part of Schwab Retirement Planner. Use of the term “personalized” in the context of the Schwab Retirement Planner service (“service”) refers to the savings and investment recommendations made by GuidedChoice or Morningstar and personal data that may be provided by you which will form the basis for GuidedChoice’s or Morningstar’s allocation of your account assets in one of the discretionary managed portfolios and will result in a savings recommendation within the plan and outside the plan. For plans that do not include a salary-deferral feature, this fee-based service does not include a savings recommendation within the plan; references to savings strategy, savings recommendation, and annual savings increases are not applicable to these plans. My Retirement Progress™ services are also not provided for plans that do not include a salary-deferral feature. Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. Plan sponsors may select either investment advisor to provide the managed account service within Schwab Retirement Planner. There is no guarantee a participant’s savings and investment strategy will provide adequate income at or through his or her retirement. Fees are charged for Schwab Retirement Planner, including its discretionary investment management service, based on the participant’s account balance. Participants should carefully consider information contained in the materials furnished at their employer’s direction regarding the services provided by Schwab, Morningstar, or GuidedChoice, including information regarding compensation, affiliations, and potential conflicts.
5 Schwab Participant Service Representatives are available from 7:00 a.m. to 11:00 p.m. ET Monday through Friday.
6 Schwab Personal Choice Retirement Account (PCRA) is offered through Charles Schwab & Co., Inc. (Member SIPC), the registered broker-dealer, which also provides other brokerage and custody services to its customers.