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E*TRADE is an established online discount brokerage that also has a brick-and-mortar presence. It was acquired by Morgan Stanley in 2020 for $13 billion, bolting a strong offering for self-directed investors onto Morgan Stanley’s vast wealth management services. E*TRADE indicates that it designed Core Portfolios with the premise that "we don't start until we get to know you." It aims to give you control over your investments and to easily track your performance.
Pros & Cons
Can open an account with just $500 and access funds with low expense ratios
Very easy to enroll and get started, especially for existing E*TRADE customers
Online and mobile platforms are very easy to use
Incorporates socially responsible investing (SRI) as an option in Core Portfolios
Simpler risk tolerance and portfolio recommendation process limits the goal setting in the portfolio creation process
Does not offer tax-loss harvesting
Goal setting and financial planning tools available for regular E*TRADE brokerage accounts are not incorporated into Core Portfolios
- Core Portfolios is better suited for newer investors than it is for sophisticated investors.
- There's no consolidation of external accounts when creating or managing the portfolio, which can potentially lead to wash sale rule violations.
- Socially responsible investing options are available.
E*TRADE customers mostly trade in retail accounts, but the broker also offers investors robo-advisory services through its Core Portfolios. With more individual investors entering the markets throughout the COVID-19 pandemic, including many first-time brokerage customers, Core Portfolios offers a passive option. We’ll dig deeper into E*TRADE’s Core Portfolios platform to help you decide if it's the right fit for your investment needs.
|Fees||0.3% annually. In addition, ETF expenses (expense ratios) are also taken out of the account.|
|Interest Paid on Cash Balances||0.05% for excess cash, which is swept into a money market fund.|
|Customizable Portfolio||Yes, investors can incorporate SRI /ESG investing and Smart Beta ETFs into the portfolio, but otherwise, the platform is not very customizable.|
|View Portfolio before Funding||Yes|
|Customer Service||Can speak with a registered investment advisor for assistance 24/7, but it is not a dedicated advisor. Their service is more geared towards getting people up and running on their system.|
|Financial Advisor Available||Yes, but not a dedicated professional.|
|Cash Management||Portfolios hold 1% in cash. E*TRADE utilizes a cash sweep to a money market fund until cash balances are used as part of a rebalancing. Cash in the money market fund can also be used to fund a separate bill pay or checking account at E*TRADE. Transfers between accounts is straightforward.|
|External Account Sync/Consolidation||No|
|Mobile App||Android, iOS|
- Low expense ratios: Relatively low expenses ratios typically range from 0.06% to 0.12%. They're taken directly out of your account.
- It's easy to enroll: Existing customers can go straight to the account opening process after they've logged in logging in, although new customers will have to set up an E*TRADE account first. But opening an account is quick, easy, and straightforward.
- Easy online and mobile platforms: Core Portfolios is clean and uncluttered. It's easy to navigate through the initial questionnaire process, and the "frequently asked questions" area earns a thumbs-up.
- Incorporates socially responsible investing (SRI): You have a choice between having part of your portfolio invested in socially responsible (SRI/ESG stocks) stocks or smart beta ETFs.
- Portfolio recommendation process: You can go through the portfolio creation process as often as you like if you want to see changes based on various responses. Investment advisors are also available to assist investors with establishing the best portfolio for their needs.
- No tax-loss harvesting: There's no tax-loss harvesting on E*TRADE Core Portfolios accounts, although portfolios are limited to municipal bonds to limit the issue of taxable interest.
- Goal setting and financial planning tools: Goal planning in E*TRADE’s Core Portfolios is limited and its questionnaire is on the basic, simple side. It uses just a handful of drop-down questions and you can't customize your goals or enter more than one.
Setting up a Core Portfolios account at E*TRADE is quick and easy. Anyone can use the E*TRADE website to take the risk tolerance profile questionnaire, regardless of whether they have an existing account at E*TRADE. They can indicate initial and any recurring deposits and see a recommended portfolio.
You can go through the process multiple times if you want to see changes in recommended portfolios based on different responses. Investment advisors are also available to assist investors and potential customers with establishing a Core Portfolios account and determining the best portfolio for their needs.
E*TRADE asks if you are a new or returning customer after you've gone through the process of getting a recommended portfolio. Existing customers go directly to the account opening process after logging in. New customers will have to set up an E*TRADE account. The account opening process at E*TRADE is similarly straightforward and is completed quickly and easily.
An E*TRADE Core Portfolios account requires a $500 initial investment, which is higher than some robo-advisors with no account minimums.
Goal planning in E*TRADE’s Core Portfolios is limited, unlike robo-advisories that have more detailed questionnaires regarding your goals, needs for withdrawals, and time horizons. E*TRADE chose a less complicated approach for its managed account offering. It only has a handful of drop-down questions, and there's no ability to customize it for the individual investor. You can't enter two separate future goals, such as a car purchase and money for your children’s college fund.
The E*TRADE questionnaire’s longest time horizon is just 11 years. This may work well for many E*TRADE customers, but other investors will prefer more robust goal-planning tools. Two customers with the goal of saving for retirement with withdrawals in 11 or more years and similar risk tolerances would receive the same portfolio recommendation even if one client is 55 years old and the other is 20 years old.
The recommended portfolio allocates 20% to fixed income, but a 20-year-old would often be advised not to have any fixed income. More fixed income may be appropriate for the older investor. These two investors may share some of the same goals, but not obtaining more information, such as their ages and other goals, may not result in a portfolio best suited for all investors.
Goal planning differentiates E*TRADE’s robo-advising platform, but not necessarily in a good way. Not all investors are looking to trade simplicity for their specific investment needs.
Core Portfolios allows clients to set up automated recurring deposits that are easy to increase, decrease, or otherwise manage. Margin isn't available in Core Portfolios accounts, but investors can borrow against their accounts. E*TRADE’s interest rates for this are on the high side, however, at more than 7%.
Investors aren't able to include any of their individual holdings or purchase assets for inclusion in Core Portfolios accounts.
Transfers into and out of accounts are simple. Cash can be withdrawn or transferred to other E*TRADE accounts with ease.
Core Portfolios holds 1% in cash, and these portfolios will be rebalanced whenever your investment mix drifts at least 10% or more from your target allocation. Cash is swept into a money market account until it's transferred out to another E*TRADE account, such as a checking or bill payment account.
Portfolio construction for E*TRADE Core Portfolios accounts is fairly straightforward. A very quick questionnaire about your initial investment and recurring deposit amounts, your time horizon, and your risk tolerance leads to a suggested portfolio that best fits the investor’s questionnaire responses. You can also override the suggested portfolio and choose a different portfolio.
Portfolios are managed exclusively with ETFs chosen in conjunction with modern portfolio theory techniques. You can diversify the asset classes in the portfolio using individual ETFs in each asset class to maximize returns while lowering risk through a diversified portfolio. You can also choose whether you want part of the portfolio ETFs to consist of SRI/ESG stocks or smart beta ETFs that are more actively managed in an effort to increase portfolio gains relative to other ETFs.
- Core Portfolios are highly diversified across domestic and international equity and fixed-income ETFs.
- Income portfolios offer higher dividend yields and a lower overall risk profile.
- Tax-optimized portfolios are designed for investors in higher tax brackets.
|Fixed Income||Yes, but limited to municipal bond ETFs for tax efficiency|
|Socially Responsible or ESG Options||Yes|
E*TRADE speaks of the ability to customize its Core Portfolios accounts, but this is limited to a choice of having part of your portfolio invested in socially responsible (SRI/ESG stocks) stocks or smart beta ETFs. This is where the ETF is more actively managed in an effort to increase portfolio gains relative to other ETFs.
These are nice features available to Core Portfolios investors, but it's a stretch to call it customization.
Core Portfolios are invested in ETFs according to allocation percentages guided by your questionnaire responses and modern portfolio theory. The accounts are rebalanced semi-annually, as well as when they drift out of line with the portfolio allocations by at least 10%.
Accounts can be monitored online, and investors are kept informed about key market events and trends that might impact their portfolios. E*TRADE will also send a regular online statement with holdings information, trades made, and dividends received.
There's no tax-loss harvesting on E*TRADE Core Portfolios accounts, although fixed income ETFs in the portfolio are limited to municipal bonds to limit taxable interest.
Investors can see the entirety of their various accounts when they're online, but E*TRADE’s brokerage has tools to show overall asset allocations by asset class and at the individual portfolio level. This allows an investor to make changes in their various accounts to ensure proper diversification across multiple accounts. Core Portfolios doesn't do this analysis or choose securities based on the overall financial picture of the investor.
|Key Portfolio Management Features|
|Automatic Rebalancing||Semi-annually, or whenever the account drifts out of line with the portfolio allocations by at least 10%|
|Reporting Features||Online monitoring and statements|
|Tax-Loss Harvesting||No tax balancing, but fixed income is limited to municipal bond ETFs to help reduce taxable income
|External Account Sinking/Consolidation||No – E*TRADE does have these capabilities for regular accounts. However, Core Portfolios do not do this analysis or choose securities based on the overall financial picture of the investor|
The desktop experience with Core Portfolios is intuitive. The page isn't cluttered, the concepts are presented succinctly, and it's easy to navigate through the questionnaire process and open an account. The "frequently asked questions" area links on the primary menu for those who are new to investing are very helpful and provide access to useful education.
That said, the basics of how these accounts work could be better outlined on the primary Core Portfolios web page. But all the information is all there and the desktop interface is easy to use.
Core Portfolios information on E*TRADE’s mobile app works the same as the desktop. The mobile app offering is very easy to use, and accounts can be opened from the mobile app. Money transfers into or out of Core Portfolios accounts are easy to do on the mobile app, so transferring money to an E*TRADE account that supports checking or bill payment is very simple.
Phone support at E*TRADE is 24/7. Support focuses more on technical support after the account is set up. The average hold time to reach an investment advisor is between one and three minutes. E*TRADE also makes investment advisors available to Core Portfolios customers and potential customers, and there's an E*TRADE Tax Center to help clients understand how their investments will be taxed.
There's also a good deal of information about Core Portfolios accounts on the E*TRADE website, and the "frequently asked questions" section answers the majority of those that people might have about robo-advisory accounts. Information is presented in an easy-to-read way where key topics are in bold with sections that can be expanded to see additional detail for the topic.
There's also a physical branch network for clients to visit.
Two-factor authentication is available on E*TRADE’s platform, and biometric security is available for mobile phones with either facial recognition or fingerprints. E*TRADE also provides additional investor protection beyond coverage through Securities Investor Protection Corporation (SIPC) through the Morgan Stanley excess of the SIPC supplemental insurance policy. E*TRADE Core Portfolios’ security is up to industry standards.
E*TRADE offers a tremendous amount of educational information, and it's available to anyone on its website rather than being limited to just account holders.
The Core Portfolios main page has an overview of the process and the Core Portfolios FAQ section is comprehensive and easy to navigate. The FAQ section provides overviews of what Core Portfolios are, why they use ETFs, what portfolio balancing is, and the costs involved. It also contains a section outlining the program’s investing approach and criteria for investments in the portfolio.
Beyond the FAQ content, there's also a “Knowledge” top menu selection that provides overviews of diversification and risk tolerance. The initial “Knowledge” page also has a link to the E*TRADE educational library, which provides a tremendous amount of educational information on investing.
Commissions and Fees
E*TRADE’s Core Portfolios accounts require at least $500 to open, and they have a flat fee structure of 0.3% or 30 basis points so a $10,000 account would have an annual fee of just $30. This annual fee is calculated monthly and is based on the account value at the beginning of each month.
Core Portfolios customers must also pay ETF expense ratios that typically range from 0.06% to 0.12%. The fees are very reasonable, but E*TRADE’s 0.3% annual fee is higher than some of its competitors in the robo-investing space, including some competitors that don’t charge advisory fees at all.
|Management fees for $5,000 account||0.3%; $15 per year or $1.25 per month|
|Management fees for $25,000 account||0.3%; $75 per year or $6.25 per month|
|Management fees for $100,000 account||0.3%; $300 per year or $25 per month|
|Termination fees||$75 for a full transfer out and $25 for a partial transfer out. The $25 fee is not charged on Core Portfolios accounts with at least $5,000, and they're also not charged if the transfers are to another E*TRADE account.|
|Expense ratios||The majority fall between 0.06% to 0.12%|
E*TRADE’s Core Portfolios features a simple account setup process and an intuitive desktop platform that's easy to navigate. It’s particularly good for younger investors who are always on the go and who want access to an industry leading mobile platform. After all, E*TRADE is a pioneer in mobile investing.
The biggest downsides of E*TRADE’s Core Portfolios are its lack of tax-loss harvesting, its weak goals and time horizons planning, and the inability to consolidate external accounts. These are key missing elements that make it far less suited for investors with complicated finances and tax situations.
What is E*TRADE Core Portfolios?
E*TRADE is an online discount brokerage that also has a brick-and-mortar presence. Its Core Portfolios offering can be a good option for those who are new to investing thanks to its low account minimum.
How much does E*TRADE charge for Core Portfolios?
E*TRADE’s Core Portfolios has a flat fee structure of 0.3% or 30 basis points. A $10,000 account would have an annual fee of just $30. It's calculated at the beginning of each month. Customers must also pay ETF expense ratios from about 0.06% to 0.12%.
What is the difference between Vanguard Digital Advisor and E*TRADE Core Portfolios?
Vanguard Digital Advisor and E*TRADE Core Portfolios are similar in several respects, providing reliable robo-advisor options. But Vanguard requires a minimum account of at least $50,000, which can be prohibitive for a new investor who's just starting out or who doesn't have a great deal of money to invest. The Vanguard account setup process is more complicated than what Core Portfolios offers. It requires speaking with an advisor.
How do I get my money from my E*TRADE Core Portfolios?
Your cash is moved into a money market account. You can transfer it from there into another E*TRADE account, such as a checking account.
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CNBC. "Morgan Stanley to buy E-Trade for $13 billion in latest deal for online brokerage industry."
E*TRADE. “Customer Service Summary."
E*TRADE. “Frequently Asked Questions."