Charles Schwab Intelligent Portfolios vs. E*TRADE Core Portfolios

Charles Schwab and E*TRADE are major investment brokerage firms that have entered the digital investment management space by leveraging some of the strengths of their online brokerage experience. Schwab Intelligent Portfolios and E*TRADE Core Portfolios have some basic distinctions which make it easy to choose the best platform for you. E*TRADE requires $500 to use the robo-advisor service, while Schwab’s entry point is a steeper $5,000. For cost-conscious investors, Schwab doesn’t charge portfolio management fees for the basic offering, while E*TRADE charges 0.30% of assets under management (AUM). Each platform offers a degree of customization with sustainable investing options, while Schwab also has an income portfolio and E*TRADE offers a smart beta choice. On the go investors might shift towards our best robo-advisor for mobile winner, E*TRADE. This comparison will arm you with the pros, cons, and features of each digital investment manager so you can make the best choice for your needs. 

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• Minimum Account: $5,000 ($25,000 for Premium)
• Fees: $0, expense ratios range from 0.03%-0.18%. ($300 setup plus $30 per month for Premium)

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• Schwab’s portfolios are among the most diversified available with U.S. and international market cap and fundamental index ETFs, a vast range of bonds, and commodity ETFs. 
• 24/7 customer service and branches make accessing help a breeze. 
• The required cash allocation can be a welcome feature during market drawdowns. 
• The addition of SIMPLE IRAs, trusts, and custodial accounts to the typical retirement and taxable brokerage accounts make Schwab enticing for a range of investors.

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• Account Minimum: $500
• Fee: 0.3%

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• The available financial consultants are a benefit for investors who like to consult with a live advisor about their investments.
• Investors who like a factor-based investment approach might like the smart-beta investment portfolio available at E*TRADE.
• The lack of tax-loss harvesting could be a barrier for those with a taxable account.

Account Setup

Like most digital investment advisors, Schwab Intelligent Portfolios asks users questions related to investing goals, timeline, and risk level. The platform incorporates your responses to create a widely diversified ETF portfolio with an 8% to 10% cash allocation. You’ll need to open an account to view the exact ETFs, but rest assured, the roughly 12 funds sport low-management fees. 

Schwab Intelligent Portfolios doesn’t charge a management fee at the basic level, but you’ll need $5,000 to open an account. The $5,000 account minimum puts Schwab higher than many competitors. Anyone can reach phone customer service and online chat 24/7 for account related questions. Branch representatives are also available, although Schwab Intelligent Portfolios doesn’t provide financial planner sessions like the Premium version that is available for accounts over $25,000 and has a $300 initial planning fee and costs $30 per month thereafter. 

All Schwab customers can access the free digital Schwab Financial Plan. This tool incorporates your financial and retirement information to determine the likelihood of reaching your retirement goals. You can adjust the inputs to view distinct scenarios, and Schwab provides recommendations to help you better meet your financial targets. 

E*TRADE Core won our best robo-advisor for mobile category. The setup is quick, and you’ll only need $500 to use this robo-advisor. Whether you have an account or not, you can take the initial questionnaire and view the proposed asset allocation. You will need to wait until you open the account to see the exact ETFs. You can adjust the portfolio by retaking the quiz and choose ESG and smart beta options as well. Opening the account follows the completion of typical personal questions including Social Security number, and linking an account to transfer the funds. 

E*TRADE Core Portfolios levies a 0.30% AUM fee and, similar to Schwab, invests your account in low-fee ETFs. Core Portfolios clients and potential users can access financial consultants weekdays from 8:30 a.m. to 8:30 p.m. ET.  

Account setup is easy at both E*TRADE Core Portfolios and Schwab Intelligent Portfolios, but the key differences are lower account minimums at E*TRADE Core Portfolios and the fact that Schwab Intelligent Portfolios doesn’t charge management fees for the basic offering.  

Goal Planning

Schwab Intelligent Portfolios users can choose from a U.S.-focused or globally diversified portfolio. You can customize investing goals such as retirement, college, long-term wealth, home buying, or income stream. Visit the settings tab of your portfolio to update goals and initial inputs. 

Schwab Intelligent Portfolios’ goal dashboard provides a handy view of a graph with the current value and future average, best- and worst-case scenario outcomes, based upon your goal target date. You’ll also find your risk profile, contributions, and sliders to adjust risk profile and contributions. Adjustments are immediately reflected in the graph that shows future outcomes. The free Schwab Financial Plan is another tool to explore various goal-based scenarios in depth. 

E*TRADE Core Portfolios offers fewer goal planning features than Schwab. The initial investor questionnaire provides three goal choices, build wealth, retirement, or target goal. Users can choose from the core offer or a smart beta or socially responsible investing (SRI) portfolio. E*TRADE’s longest time horizon is 11+ years and asset allocations tend to run somewhat aggressive, with greater stock allocations at various risk levels compared to some competitors. For example, when inputting a “home down payment” goal where you’ll need all the money in five to seven years, the platform recommends a moderate 60% stock and 40% bond allocation versus a more conservative asset mix for this intermediate time period. 

For investors who prefer shorter-term goals, income, and widely diversified goal-oriented portfolios, Schwab Intelligent Portfolios is superior to E*TRADE Core Portfolios. That said, those with long-term investment goals seeking a basic digital investment advisor will still do okay with the minimal goal planning features at E*TRADE Core Portfolios. 

Account Types

Both Schwab Intelligent Portfolios and E*TRADE Core Portfolios offer the most commonly used account types, including the basic taxable accounts, custodial accounts, and individual retirement accounts (IRAs). While Schwab also gives clients access to trusts and SIMPLE IRAs. 

Schwab  account types:

• Individual taxable
• Joint taxable
• Custodial 
• Traditional IRA 
• Roth IRA 
• Simplified employee pension (SEP) IRA 
• SIMPLE IRA
• Rollover IRA
• Trust 

E*TRADE  account types:

• Individual taxable 
• Joint taxable 
• Custodial 
• Traditional IRA 
• Roth IRA 
• Rollover IRA
• SEP IRA

Account Services

Both Schwab and E*TRADE offer comprehensive self-directed trading. Both firms also have physical branches. With recent consolidations, Schwab customers have access to all TD Ameritrade’s account services and E*TRADE users can access the Morgan Stanley products and services. That means banking, borrowing, and financial advisors are available at each company.

Cash Management 

Neither Schwab nor E*TRADE has cash management accounts integrated within the digital robo-investing vertical. It’s important to note that Schwab holds approximately 8% to 10% cash in an interest bearing account within each portfolio. This amount will be maintained and varies per asset allocation.

Both digital investment advisors offer a range of cash services such as high yield cash and checking accounts, CDs, and more through separate accounts. Schwab offers it through Charles Schwab Bank and E*TRADE through Morgan Stanley Private Banking.

Portfolio Construction

Both platforms construct your portfolio based upon your responses from the initial questionnaire and in accordance with modern portfolio theory (MPT). Schwab customers can select from three investment strategies, global, U.S., and income focused. The global strategy includes both stock and bond international ETFs along with U.S. ETFs. The investments are selected from a stable of 51 ETFs and span 20+ asset classes. The equities encompass both market capitalization weighted and fundamental weight. The fixed income assets include U.S. Treasuries, corporate bonds, municipal bonds, and a range of other types of fixed income. REITs, commodities, and cash round out the expansive list of available assets. The cash allocation is required in every portfolio, meaning some funds are sitting rather than being fully invested in the market. The required cash is a welcome feature during declining investment markets, but might hinder performance during a bull market. 

E*TRADE Core Portfolios are made up of core, ESG, and a smart beta option. The core option includes eight asset classes which span five equity assets. These ETFs include allocations to U.S. and international stocks, including value and small caps. The two bond funds cover the corporate and government spheres. Unlike Schwab Intelligent Portfolios, E*TRADE Core Portfolios seeks to minimize the cash in the account with a 1% target and rebalances whenever the cash balance grows. 

Portfolio Customization 

Neither platform offers a great amount of customization, although Schwab Intelligent Portfolios goes a bit further than E*TRADE Core Portfolios. Schwab customers can choose from three types of portfolios, U.S. or global focus, and income. Schwab users can select up to three ETFs to exclude from their portfolio. E*TRADE clients have access to a core, SRI, and smart beta portfolios. 

Schwab Intelligent Portfolios are more diverse and also include a greater cash allocation. E*TRADE Core Portfolios owns fewer ETFs and includes a low single-digit cash allocation. While E*TRADE’s portfolios are less diversified and lack REITs, commodities, fundamental ETFs, and an international bond allocation, the firm has an additional emphasis on small caps and both large- and mid-cap value equity funds. There isn’t a correct diversification style for each asset allocation. Each portfolio will yield distinct returns, depending upon the particular investment market environment.

Portfolio Management

Schwab Intelligent Portfolios monitors daily and rebalances as needed to maintain the client’s preferred asset allocation. E*TRADE’s portfolios are also monitored daily and rebalancing at E*TRADE  is scheduled either semiannually or when the asset allocations drift 10% from their target. Users can change their portfolio’s asset allocation at any time using the tools on each site. 

Neither platform offers a tool within the robo-advisor to aggregate external accounts. The Schwab Financial Plan offers this feature, but it is not integrated with Schwab Intelligent Portfolios unless you opt for the premium service. 

Tax-Advantaged Investing 

Tax-loss harvesting is a tax minimization strategy that sells securities with a loss to offset taxable gains. This will lower your tax bill. It is a viable strategy for those with a taxable account. 

Schwab Intelligent Portfolios offers tax-loss harvesting to clients with accounts worth more than $50,000. While E*TRADE’s Core Portfolios doesn’t provide tax-loss harvesting, E*TRADE helps reduce users taxes by investing in municipal bond ETFs within the taxable accounts.  

Security

As is the case today, most major financial firms have excellent security protocols and fraud protection. Schwab Intelligent Portfolios and E*TRADE Core Portfolios have advanced encryption, biometric, and two-factor authentication. At Schwab, securities are protected by the SIPC, with additional insurance provided by Lloyd’s of London for up to $600 million. Schwab goes one step further, with guaranteed replacement of any losses due to unauthorized account activity. E*TRADE’s SIPC insurance is subsumed under the Morgan Stanley excess coverage and provides up to $1 billion in covered losses. 

There is no insurance that protects investors from normal market fluctuations, including losses in investment values.

User Experience

Desktop

Schwab Intelligent Portfolios’ desktop user experience is clean with easy access to all important information available from the home dashboard. You can view your goals, portfolio, performance, and activity with one click. Adjusting settings and asset allocations is a breeze. The sidebar lists information such as statements, transfers, FAQs, and educational content. 

E*TRADE Core Portfolios also has a solid user experience on the desktop. The home page is clean with easy navigation. FAQs are front and center to help with common questions that pop up. It’s easy to review your portfolio’s performance, rates of return over various time periods, and compare results with relevant benchmarks. 

Schwab Intelligent Portfolios and E*TRADE Core Portfolios both offer a clean, comfortable desktop experience. 

Mobile App 

Neither Schwab Intelligent Portfolios or E*TRADE Core Portfolios have their own mobile app. You’ll need to view your portfolio within the larger Schwab and E*TRADE mobile apps. Mobile users will find a similar experience on the mobile platform as on the desktop at each company. As winner of our best robo-advisor for mobile category, E*TRADE takes the mobile win. 

Customer Service

Customer service is strong at both Schwab and E*TRADE. FAQs are comprehensive at both platforms. Both companies also offer 24/7 phone customer service. E*TRADE has designated financial consultants available by phone during week-days, but no chat. While Schwab has personnel to handle Intelligent portfolios questions 24/7.

When it comes to customer service. Schwab Intelligent Portfolios 24/7 live customer service and human chat puts it ahead of E*TRADE Core Portfolios.

Fees

Schwab Intelligent Portfolios doesn’t charge a portfolio management fee for the basic offering. This makes E*TRADE Core Portfolios stick out a bit with a 0.30% AUM fee, but this is in line with many competing digital investment advisors. Both platforms use ETFs that have low fund management fees. The higher investment management fee at E*TRADE might be justified due to access to human investment advisors if you are looking for that in addition to customer service. It is also important to note that the no fee investment management at Schwab Intelligent Portfolios comes with a required cash allocation. This cash allocation might be a drawback for investors who want to remain fully invested in the financial markets. 

If you prefer access to an investment advisor, then E*TRADE is your choice. Schwab Intelligent Portfolios premium offers financial advisors for low subscription pricing of $30 per month with a one time $300 setup fee, but the account minimum is even higher at $25,000. 

Our Take

Both Schwab and E*TRADE’s digital investment advisors enjoy the benefits of belonging to  major investment brokerage firms. Both E*TRADE Core Portfolios and Schwab Intelligent Portfolios are solid robo-advisors. Schwab has a bit more depth in some of its features like goal planning, but it was too close to call in almost every category. Newer investors will appreciate the $500 minimum required at E*TRADE Core Portfolios, the financial consultants, and a better mobile experience. Cost-conscious investors can’t beat the free investment management at Schwab Intelligent Portfolios but they will need at least $5,000 to take advantage. If you have an existing account at either E*TRADE or Schwab, you might prefer the ease of opening a managed account at the same company. 

FAQ

Can I lose money with a robo-advisor?

Yes. Investing in financial markets is designed for long term investing, because investment values go up and down. The reason people invest in these riskier assets is that during long periods of time stocks, bonds, and related fund investing has offered higher returns than certificates of deposit (CD) and cash accounts. Unlike a CD or bank savings product, the return of your initial investment is not guaranteed.

Why not choose a target date fund instead of Schwab or E*TRADE robo-advisors?

Investing in a target date fund, with an end date in line with your projected retirement is another alternative to robo-advisor investing. The benefits of investing with Schwab Intelligent Portfolios or E*TRADE Core Portfolios is that you’ll get greater diversification, customization, and control over your investment portfolio.  

Methodology

Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.

With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.