A unique approach that combines retirement savings features in a single offering

Studies indicate that there are at least two keys to better results: cost and advice.1,2 That’s why we’ve combined low-cost3 index funds, built-in independent third-party investment advice services,4 and a personalized saving strategy in a single offering—Schwab Index Advantage®.

Low-cost3 index investments

Schwab Index Advantage offers an array of index investments for plan sponsor selection from some of the industry’s largest fund providers.

  • Index mutual fund lineup with more than 30 funds across more than 15 asset classes or an exchange traded fund lineup with more than 70 funds across more than 25 asset classes5
  • Variety of equity sizes, styles, and geographies, as well as fixed income and other asset classes
  • Investments intended to track established market indexes
FDIC-insured deposit feature6—Schwab Bank savings
  • Deposit feature offered through Charles Schwab Bank for capital preservation
  • FDIC insurance at participant level up to $250,000
  • Daily liquidity
Low-cost third-party investment advice services4

Participants 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
  • Every 90 days, a GuidedChoice or Morningstar Associates review of each participant’s investment mix, plus fine-tuning if needed
  • Portfolio realignment at least annually
Personalized saving strategy

Beyond investment advice, Schwab Index Advantage also helps employees create a plan and stay on track with:

  • Savings recommendations
  • Automatic savings increases (if the plan allows)
  • Ongoing access to live assistance, when they need it7
A self-directed alternative

At the sponsor’s direction, the plan can also include a self-directed brokerage feature, the Schwab Personal Choice Retirement Account®.8 Employees with the time, interest, and knowledge to manage the investments in their retirement account can access this feature, which offers:

  • Access to one of the largest selections of no-load, no-transaction-fee mutual funds8 in the self-directed brokerage account industry, as well as an expansive selection of stocks, exchange-traded funds, bonds, CDs, and more
  • Premium research and tools

And participants always have the choice to manage on their own from among the investment options made available by the plan sponsor.

1 Government Accountability Office (GAO), “Private Pensions: 401(k) Plan Participants and Sponsors Need Better Information on Fees,” October 2007.

2 Financial Engines and Aon Hewitt, “Help in Defined Contribution Plans: 2006 Through 2010,” September 2011. “Help” in this research is defined as target-date funds, managed accounts, and online advice.

3 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 exchange traded funds 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.

4 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.

5 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 independent registered investment advisors GuidedChoice Asset Management, Inc. (“GuidedChoice®”) or Morningstar Associates, LLC, a wholly owned subsidiary of Morningstar, Inc. Using investment alternatives available in the plan, GuidedChoice creates discretionary managed portfolios based on Modern Portfolio Theory, and Morningstar Associates creates discretionary managed portfolios based on human capital methodology. These investment alternatives have been selected by an appropriate plan fiduciary specifically for use in the managed account. Other investment options may be available in the core lineup that are not included in the managed account. For a complete list of the investments that are available under your plan, visit schwab.com/workplace, click on Statements and Reports, and view the last annual Fee and Investment Notice and any subsequent Change Notices. GuidedChoice and Morningstar Associates are not affiliated with or an agent of Schwab Retirement Plan Services, Inc. (“SRPS”), Charles Schwab & Co., Inc. (“CS&Co.”), a federally registered investment advisor, 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 Associates. Schwab Advice Consultants, who are not employees of GuidedChoice or Morningstar Associates, facilitate participant access to the GuidedChoice or Morningstar Associates services, but do not provide investment advice or recommendations regarding the GuidedChoice or Morningstar Associates 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 Associates and personal data that may be provided by the participant which will form the basis for GuidedChoice’s or Morningstar Associates’ allocation of the participant’s account assets in one of the discretionary managed portfolios and will result in a savings recommendation within the plan and outside of 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 adjustments 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 their 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 SRPS and its affiliates, Morningstar Associates, or GuidedChoice, including information regarding compensation, affiliations, and potential conflicts.

6 Schwab Bank Savings is a money market deposit account (“MMDA”) at Charles Schwab Bank (“Schwab Bank”). A MMDA is a type of savings deposit. Schwab Bank Savings is only available 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.

7 Schwab Participant Service Representatives are available from 7:00 a.m. to 11:00 p.m. ET Monday through Friday.

8 Schwab Personal Choice Retirement Account® (PCRA) is offered through Charles Schwab & Co., Inc. (Member SIPC), the registered broker-dealer, as part of the Plan, with Plan recordkeeping services provided by Schwab Retirement Plan Services, Inc.

For participants who utilize the Personal Choice Retirement Account (PCRA), the following fees and conditions may apply: Schwab’s short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource® service (and certain other funds with no transaction fee) and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading. Trades in no-load mutual funds available through the Mutual Fund OneSource service (including Schwab Funds), as well as certain other funds, are available without transaction fees when placed through schwab.com or our automated phone channels. Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds. Funds are also subject to management fees and expenses. Charles Schwab & Co., Inc., Member SIPC, receives remuneration from fund companies for recordkeeping, shareholder services, and other administrative services for shares purchased through its Mutual Fund OneSource service. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services.