Charles Schwab Raises Minimum Assets for Tax-Aware Accounts

The Charles Schwab Corp. is increasing the minimum asset requirement for specific tax-aware long-short separately managed accounts from $1 million to $10 million. Starting September 16, the brokerage will also stop accepting new funds or enrolling new clients in portfolio margin accounts.

These restrictions respond to a surge in affluent investors using complex long-short strategies to generate losses and lower capital-gains taxes. Schwab noted that the growth of these strategies could limit the firm's ability to support the full range of capabilities clients rely upon.

Fidelity Investments has taken similar action by indefinitely pausing the onboarding of new clients for these strategies. Both firms have reduced support for these trades due to unprecedented growth and concerns that some investors may not fully understand the associated risks.