TD Ameritrade Robo-Advisor: Essential Portfolios

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Competition among robo-advisors heated up when TD Ameritrade entered the fray in 2016 with its version of automated investing, called Essential Portfolios.

portfolio foldersWhile leading robo-advisors, such as Betterment and Wealthfront, need to look over their shoulder, consumers are the clear winners thanks to rock bottom expense ratios and low management fees.

Although TD Ameritrade is the new kid on the block and has a ways to go before standing toe-to-toe with robo-advisor leaders, it has enough bells and whistles to entice most casual investors.

TD Ameritrade Makes A Splash
In Robo Investing

TD Ameritrade has few rivals when it comes to all-round brokerage services.

Its options trading platform, thinkorswim, is virtually without compare and it ranks highly on our list of best forex brokers too.

Plus, TD Ameritrade has an extensive range of no-commission ETFs, and caters to fixed income and futures trading too.

So, its foray into the robo-advisor category is a shot across the bow to existing robo-advisors and a siren sound to new customers with management fees of 0.30%, expense ratios no greater than 0.08% and an account minimum of $5,000, which compares well to many rivals.

>> Related: Best Robo Advisors For Fees

Essential Portfolios 101

Getting started with Essential Portfolios is similar to the onboarding process at most other robo-advisors. Answer a few questions about your financial objectives, time horizon, and risk profile to begin. Then Essential Portfolios builds an objective portfolio that is aligned with your financial goals.

Some robo-advisors, such as Schwab Intelligent Portfolios, offer free portfolio management and make money from the expense ratios of their proprietary funds. TD Ameritrade avoids potential conflicts of interest with clients associated with this approach by instead choosing to use non-proprietary ETFs to support objective investment portfolio management.

TD AMERITRADE ESSENTIAL PORTFOLIOS SPOTLIGHT
 

TD Ameritrade
Essential Portfolios

InvestorMint Rating

4 out of 5 stars

  • Account Balance Minimum: $5,000
  • Management Fees: 0.30%

via TD Ameritrade secure site

TD Ameritrade lives up to its low fee reputation by using funds with expense ratios that don’t exceed 0.08%, a charge that compares very favorably with the higher expense ratios charged by many other robo-advisors.

As an investor, the headline figure that grabs attention is portfolio management fees, but the real number to compare is the total cost of both management fees and expense ratios. By keeping expense ratios so low, TD Ameritrade Essential Portfolios costs rival the rock bottom costs of leading industry peers.

>> More: Discover The Best Robo Advisors

ESSENTIAL PORTFOLIOS SELECTIONS

Clients can choose among five Essential Portfolios recommended by Morningstar Investment Management:

  • Conservative
  • Moderate
  • Moderate Growth
  • Growth
  • Aggressive

An example of the conservative target portfolio allocation is shown below:

td ameritrade conservative portfolio target allocation

The Total Performance Returns of the five portfolios as of June 30, 2017 were:

PortfolioReturn % Since Portfolio Inception
Conservative3.73%
Moderate6.12%
Moderate Growth7.81%
Growth10.87%
Aggressive13.98%

Essential Portfolios Fees &
Account Minimums

Compared to Betterment and Wealthfront, Essential Portfolios has a higher account minimum, but it’s significantly lower than the minimums charged by some others, such as Personal Capital and Rebalance IRA, which both have $100,000 minimums.

Robo-AdvisorEssential PortfoliosBettermentWealthfrontPersonal Capital
Account Minimum$5,000$0$500$100,000
Fees0.30%0.25%0.25%0.89%

Essential Portfolios Mobile

On-the-go access to your portfolio is made available easily via the TD Ameritrade Essential Portfolios mobile app.

You can monitor your portfolio’s performance and view account balances and asset allocations on both iPhones and Android devices (available through the AppStore and Google Play).

Essential Portfolios Summary

Vanguard, Schwab, and Fidelity have all made a splash in the robo-advisor space by following in the footsteps of industry pioneers, such as Betterment, Wealthfront and Personal Capital. With Essential Portfolios, TD Ameritrade has entered the game with a robo-advisor that competes aggressively on fees – the total cost of management fees and expense ratios rivals the rock bottom costs charged by industry leaders.

The account minimum is higher than what Betterment and Wealthfront impose but significantly lower than the levels mandated by Personal Capital, Rebalance IRA, and Vanguard Personal Advisor Services. It’s right in line with the minimums imposed by Schwab Intelligent Portfolios and Fidelity Go.

For investors who are just getting started or want a robo-advisor option to complement investments in other areas, including stock trading, options trading, forex trading, and futures trading, TD Ameritrade Essential Portfolios will give you confidence you’re in the right place.

The sign up process is easy and the navigation is intuitive as good as you would expect from a top notch broker. Plus, TD Ameritrade Essential Portfolios earns brownie points for top notch customer support and world class technology, so you can feel confident you’re in good hands.

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