Charles Schwab Intelligent Portfolios and E*TRADE Core Portfolios are both better-than-average robo-advisors in terms of portfolio management and price. While Schwab Intelligent Portfolios may appeal to beginner investors because of its zero-fee structure, E*TRADE Core Portfolios offers a somewhat greater degree of flexibility. Both robo-advisors are likely to appeal most to pre-existing customers of their respective management companies, but we will focus in on the key differences between these two services to narrow down which one may be best to manage your portfolio.
- In November 2019, Charles Schwab announced a buyout of TD Ameritrade’s online brokerage. The transaction itself is expected to close in the second half of 2020, and in the meantime, the two firms will operate autonomously. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.
- In February 2020, Morgan Stanley announced its intent to acquire E*TRADE. The acquisition is expected to close in the fourth quarter of 2020. We expect the post-takeover E*TRADE to have a stronger focus on managed portfolios.
- Minimum Account: $5,000 ($25,000 for Premium)
- Fees: $0, expense ratios range from 0.03%-0.18%, with an average of 0.11%. ($300 setup plus $30 per month for Premium)
- Perfect for people looking for an easy-to-use service with no management fees
- Great for people looking to learn as they go with access to Schwab's education offerings and vast library of investing resources
- Provides asset classes that reach well beyond stocks and bonds and into real estate investment trusts, high yield corporate bonds, and precious metals, for those looking for more diversity
- Account Minimum: $500
- Fee: 0.30%
- Ideal for investors who want an easy way to get their cash working in the markets
- Easy for those who are customers of the standard E*TRADE platform to create a Core Portfolios account
- Great for investors with limited funds to start
- Once assets under management increase to $25,000 or more, you can opt for an account with additional advisor contact
Schwab Intelligent Portfolios doesn’t have significant offerings when it comes to goal planning, although there is a tool to assist in college expense planning. When it comes to tracking your investments and stress testing, Schwab Intelligent Portfolios performs better. You can run scenarios where you adjust monthly savings or retirement date to see how your accounts would be impacted, and there are also tools to study the impact of potential market downturns. For Premium clients, goal planning services are greatly improved. These customers not only receive enhanced services through the platform itself, but they also have access to financial planners for assistance.
When it comes to goal planning, E*TRADE Core Portfolios also offers relatively little compared to other robo-advisors. Client assets are kept in a single pot, and the service does not allow for separate pools of money coordinated to different goals. If you are willing to go out of the main platform, access to E*TRADE's broader goal planning tools, including retirement trackers and more, is available. Core Portfolios customers who upgrade to a Blend Portfolios or a Dedicated Portfolios account (at minimum balances of $25,000 or $150,000, respectively), have significantly greater access to goal planning, as well as the assistance of financial advisors.
Neither Schwab Intelligent Portfolios nor E*TRADE Core Portfolios offers top-of-the-line goal planning and tracking services, at least not when compared against the full field of robo-advisors. In this category, however, Schwab Intelligent Portfolios has the edge, owing to a better suite of tracking tools.
Schwab Intelligent Portfolios and E*Trade Core Portfolios both allow customers to open standard taxable retirement accounts as well as IRAs. As mentioned, Schwab Intelligent Portfolios offers better stress testing tools that can be used on your retirement portfolio. While both Schwab and E*TRADE have educational resources related to retirement planning available across their websites, E*TRADE's education center is more thorough and easier to navigate.
Schwab Intelligent Portfolios and E*TRADE Core Portfolios are evenly matched when it comes to the most common account types. Outside of the standard taxable and retirement offerings, E*TRADE Core Portfolios offers Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) accounts that Schwab Intelligent Portfolios does not. On the flip side, Schwab Intelligent Portfolios offers Savings Incentive Match Plan for Employees (SIMPLE) IRAs, and E*TRADE does not. Unless you are looking specifically for one of those three, there is no clear winner in terms of account types.
Charles Schwab Intelligent Portfolios account types:
- Individual taxable accounts
- Joint taxable accounts
- Trust accounts
- Traditional IRA accounts
- Roth IRA accounts
- Rollover IRA
- SEP IRA
- SIMPLE IRA
E*TRADE account types:
- Individual taxable accounts
- Joint taxable accounts
- Traditional IRA accounts
- Roth IRA accounts
- Rollover IRA
- SEP IRA
Features and Accessibility
Schwab Intelligent Portfolios and E*TRADE Core Portfolios differ on two important features. E*TRADE Core Portfolios offers more customization options in terms of what goes into your portfolio compared to Schwab. Schwab Intelligent Portfolios, for its part, offers tax-loss harvesting when your account reaches $50,000, while E*TRADE Core Portfolios doesn’t offer tax-loss harvesting at all. Of course, when it comes to choosing based on features, only the ones you intend to use really matter.
Schwab Intelligent Portfolios:
- Easy-to-use platform: Schwab's desktop and mobile platforms are attractive and user-friendly.
- Daily monitoring: Unlike many competitors, Schwab monitors user portfolios daily for drift.
- Strong recent performance: Schwab Intelligent Portfolio outperformed 19 other robo-advisor portfolios in Q3 of 2019.
- Tax-loss harvesting: Tax-loss harvesting is available, although only for accounts with at least $50,000.
E*TRADE Core Portfolios:
- Some portfolio customization: Core Portfolios customers have the option of including smart beta ETFs and socially-responsible funds in their portfolios.
- Easy tracking: A useful digital dashboard aids in monitoring allocation and performance.
- Education resources: Clients have access to E*TRADE's impressive education offerings.
Schwab Intelligent Portfolios' 0.0% management fee will attract younger investors, although the relatively high $5,000 minimum may prove a barrier for some. As with some other zero-fee advisors, Schwab clients do have to pay for some fees associated with ETFs. However, these are minimal in comparison with many robo-advisor management fees. Although it is not the focus of this comparison, Schwab Intelligent Portfolios Premium carries an initial planning fee of $300 and a $30 per month advisory fee in return for unlimited access to a certified financial planner.
E*TRADE Core Portfolios offers a more standard 0.30% management fee, which is either in keeping with or very slightly higher than many other robo-advisors. Coupled with a low minimum investment, E*TRADE Core Portfolios may appeal to many younger investors who may not have the capital to take advantage of Schwab’s zero-fee offering.
Like the fees, the minimum deposit at these two services is a key difference. E*TRADE Core Portfolios only requires $500 to get started or, put another way, ten times less than what you need to get going with Schwab Intelligent Portfolios.
- Schwab Intelligent Portfolios: $5,000
- E*TRADE Core Portfolios: $500
When setting up an account with Schwab Intelligent Portfolios, you are prompted by a series of questions regarding initial investment amount and risk tolerance. Upon completion of these questions, you’ll see a possible asset allocation, although the exact ETFs are not available and there is no customization allowed. The portfolios are made up of ETFs, the majority of which are managed by Schwab. It is worth noting again that Schwab is one of the few robo-advisors offering clients access to commodity ETFs. Schwab accounts are automatically rebalanced based on drift, which is monitored daily. Additionally, Schwab Intelligent Portfolios hold approximately 8%-10% of assets in cash, one of the ways that the company makes money off of these accounts without a management fee.
E*TRADE Core Portfolios also asks you about risk tolerance to assign you to one of five levels, although it does so in a multi-pronged approach which helps to ensure that you will not be confused about terminology. After you complete the questions, E*TRADE offers a portfolio allocation recommendation. At this stage you’re still able to make adjustments, including opting into smart beta and socially-responsible funds. Completed portfolios consist of ETFs managed by iShares, Vanguard and JPMorgan and are built according to the tenets of Modern Portfolio Theory (MPT). E*TRADE accounts are rebalanced semi-annually and have a target allocation for cash of 4%, which is higher than most other robo-advisor accounts (although not compared to Schwab).
Tax-loss harvesting is a process by which investments with unrealized losses are sold to credit against realized gains in a portfolio. Tax-loss harvesting is not available to E*TRADE clients and only available to Schwab clients with at least $50,000 in invested assets. Schwab clients sitting at that asset level still have to opt into tax-loss harvesting before it activates.
Both Schwab Intelligent Portfolios and E*TRADE Core Portfolios utilize advanced encryption technology to protect client security. Customers can log into their accounts through either service's mobile app with fingerprint or face ID. Both companies' accounts are insured by SIPC up to $500,000, with additional insurance provided up to an aggregate limit of $600,000,000.
Both E*TRADE Core Portfolios and Schwab Intelligent Portfolios have good customer service, but Schwab has the edge overall.
Schwab clients can contact customer service via online chat or phone at any time of day. As mentioned, Premium clients also have unlimited access to one-on-one consultations with certified financial planners.
E*TRADE clients can reach customer service any time of day via online chat through the website or mobile app, and on weekdays by phone as well from 8:30 a.m. to 8:30 p.m. Eastern time. Phone wait times of several minutes were noted.
Both companies offer online FAQs, but neither provides a comprehensive list of questions and topics.
Schwab Intelligent Portfolios and E*TRADE Core Portfolios are very evenly matched. In most ranking categories, they were within a few points of each other. If you are already a client of Schwab or E*TRADE, then their respective robo-advisor may ultimately be the best choice for the sake of simplicity. However, when there was a gap of any significance between the two in our rankings, it was often to the benefit of Schwab.
One of the biggest differences for investors choosing between the two is the approach they take to the robo-advisory space. E*TRADE is offering a portfolio of non-proprietary ETFs combined with a bit of customization, a reasonable management fee, and a low minimum to get started. In contrast, Schwab Intelligent Portfolios is offering you an escape from management fees but limiting you mostly to Schwab’s proprietary ETFs. That is not to suggest Schwab’s ETFs are a poor choice, as they have low fees and have done quite well. Simply put, Schwab’s aggressive fee approach is going to save you more in the long run, making it the better choice for investors who can put down the minimum deposit.
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