E*TRADE and TD Ameritrade share a similar challenge in the robo-advisory space. While both are well-known names, they are known more for their other financial services beyond automatically managed investment portfolios. We will look at the robo-advisory offerings of these two established players to help you figure out which one is best for your investment needs.
On November 25, 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.
- Account Minimum: $500
- Fee: 0.30%
- Aimed at investors who want an easy way to get their cash working in the markets
- Easy for those who were 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, clients can opt for an account with additional advisor contact
- Account Minimum: $5,000
- Fee: 0.30% of assets managed per year
- Focused on newer investors who are interested in long-term investing
- Great for those looking for extensive research capabilities
- Appropriate for those new to investing or those who would prefer a lower-fee robo option
- Designed to make novice investors more comfortable with a wider variety of asset classes
Neither E*TRADE Core Portfolios nor TD Ameritrade Essential Portfolios were standouts in goal planning and tracking.
E*TRADE’s robo-advisory service is not driven by goal planning. You create a single pot of money to fund all of your goals. According to E*TRADE officers, their clients felt that having a variety of separate goals just muddied the waters and made the experience more confusing. However, clients have access to all of E*TRADE’s research and education offerings, which include some planning tools. But these functions are not built into the Core Portfolios experience. The reporting on your progress towards the single goal you have defined is well-designed, but you’re not given suggestions for shoring up the account if you’re falling behind. If you have other E*TRADE accounts, you can see how your overall holdings at the firm are performing, but you can’t import assets from other financial accounts for a complete picture.
TD Ameritrade’s offering has little goal planning help, though there are articles and monthly emails customers receive to give them planning ideas. To set your investing goals, TD Ameritrade wants you to visit a branch and talk with a representative at no additional charge. You can also use the firm’s email channels or make a phone call. You can set an overall portfolio goal dollar amount, but that figure is not tied to a specific financial goal such as retirement, buying a house, or making a large purchase. Instead, it all falls into a general investing bucket. Both the website and the mobile app show you your asset allocation and changes in account value over time in easy-to-understand graphical formats. You can see how you’re tracking against the general goal you’ve set, and make adjustments to monthly deposits or change the goal if you’re falling behind.
TD Ameritrade's primary planning tool available online is a retirement calculator. As mentioned, however, TD Ameritrade wants you to talk to one of their financial advisors by phone or at a branch to discuss these types of investment. E*TRADE clients can use all of the broker's research and education offerings, which include retirement calculators. Both of these services let you set up a single pot of money to invest. However, you cannot apply the investment account to a particular goal.
Neither firm offers college savings (529) accounts. TD Ameritrade has a wide variety of trust accounts and accounts for minors.
E*TRADE Core Portfolios account types:
- Individual taxable accounts
- Joint taxable accounts
- Traditional IRA accounts
- Roth IRA accounts
TD Ameritrade Essential Portfolios account types:
- Individual taxable accounts
- Joint taxable accounts
- Traditional IRA accounts
- Roth IRA accounts
- Minor IRA accounts
- Individual 401(k) accounts
- Trust accounts
- Corporate accounts
- Coverdell accounts
- Non-profit organizations
- Other account types also available
Features and Accessibility
E*TRADE Core Portfolios:
- SRI and Smart Beta: Clients can select socially responsible or smart beta investments.
- Secured loans: You can borrow against the balance in your account with available funds of over $50,000, although interest rates are high.
- Easy-to-read dashboard: The digital dashboard on E*TRADE’s website or mobile app offers a clear view of portfolio performance and allocation.
- Personal help: Financial consultants are available by phone or at one of E*TRADE’s branch offices.
TD Ameritrade Essential Portfolios:
- Get social: You can select a Socially Aware portfolio.
- Get mobile: The mobile app offers a clear look at progress towards investing goals.
- Account types: There is a wide variety of account types available, including 529 college savings plans, Coverdell ESAs, and trusts.
- Tax-loss harvesting: All taxable TD Ameritrade portfolios are eligible for tax-loss harvesting.
- Premium plan available: Clients can upgrade to TD Ameritrade's Selective Portfolios with a $25,000 balance.
Both services start out with a few questions designed to assess your attitude towards risk, and the time frame for your investment. E*TRADE's questionnaire has quite a bit of help built-in for new investors, explaining why each query is needed. E*TRADE's initial deposit is $500 while TD Ameritrade requires an initial deposit of $5,000 in cash, and both allow you to adjust the risk level before you invest. You can choose portfolios that include ETFs designed to be socially responsible at both firms. E*TRADE has Smart Beta ETFs on its list, which are designed to beat the market through active management, with higher fees.
Neither firm shows you your exact portfolio until the account is funded, nor can you make any adjustments to the ETFs held.
E*TRADE Core Portfolios and TD Ameritrade Essential Portfolios are nearly identical when it comes to fees.
E*TRADE charges 0.30% of assets under management, assessed quarterly based on the average daily balance, deducted from available cash. Portfolios are designed to hold approximately 1% cash, mainly to cover these fees. There are no additional trading fees.
TD Ameritrade also charges 0.30% of assets under management. The fee will be assessed at the beginning of each quarter in advance for that quarter and will be prorated for accounts opened and closed during that quarter. Like E*TRADE, there are no additional trading fees.
When it comes to minimum deposits, E*TRADE holds an edge over TD Ameritrade. It requires ten times the amount of capital to open a TD Ameritrade Essential Portfolios account compared to the $500 it takes to open an E*TRADE Core Portfolios account.
- E*TRADE's minimum deposit is $500
- TD Ameritrade's minimum deposit is $5,000
E*TRADE’s portfolios contain ETFs from iShares, Vanguard, and JP Morgan. Socially responsible portfolios include ETFs from iShares. Smart beta portfolios are designed to outperform index fund investing, and carry higher management fees. E*TRADE Core Portfolio accounts are rebalanced semi-annually, or whenever the portfolio shifts too far from its target asset allocation. The portfolio management display focuses on asset allocation and performance metrics. When you make a withdrawal, the algorithm takes out available cash first, and then sells off other investments to maintain the prescribed asset allocation. You’ll be shown a screen that indicates your potential tax bill after the sale, which is an unusual touch.
TD Ameritrade’s portfolios contain ETFs from Vanguard and iShares, plus a few other providers. You can choose socially responsible ETFs, but there is little in the way of portfolio customization. Portfolios are rebalanced at least annually, or whenever the allocations stray from the target. When you are setting up a portfolio on TD Ameritrade, you are given historical returns for the prior quarter, calendar year to date (updated quarterly), and previous year.
Tax-advantaged investing is important if you plan to use taxable accounts. The most common method used by robo-advisors is tax-loss harvesting, where positions at a loss are sold to realize the loss against gains in other areas. Assets that are sold are replaced by comparable assets that maintain the overall allocations. E*TRADE does not offer tax-loss harvesting. All taxable TD Ameritrade portfolios are eligible for tax-loss harvesting.
E*TRADE Core Portfolios and TD Ameritrade Essential Portfolios are evenly matched in terms of security. E*TRADE's website and mobile apps carry a high level of encryption. Securities in accounts are insured by SIPC for up to $500,000, with excess SIPC insurance by London Insurance with an aggregate limit of $600,000,000. TD Ameritrade carries excess SIPC insurance, protecting clients in the unlikely event that the brokerage goes bankrupt. The website and mobile apps carry a high level of encryption.
TD Ameritrade has a slight edge in customer service over E*TRADE, but the margin is slim.
There is online chat available 24/7 on E*TRADE’s website and on mobile. Although the telephone representatives we spoke to were knowledgeable and helpful, it took an average of almost seven minutes on hold before a human was available. You can talk to a financial advisor on the phone, or walk into a brick-and-mortar location for help. Telephone service hours are weekdays from 8:30 a.m. to 8:30 p.m. Eastern time. The online FAQs are somewhat incomplete and would be easier to read if the questions were organized by topic.
TD Ameritrade not only has online chat available, but our test calls to the phone support service were answered quickly and authoritatively. However, the FAQs don’t go into a lot of detail.
TD Ameritrade Essential Portfolios and E*TRADE Core Portfolios are very evenly matched robo-advisors. One strength shared by both these services is the fact that the fees are all-in, meaning that you don’t pay trading commissions. Overall, however, TD Ameritrade is the superior service, even though its higher minimum deposit may be a hurdle for investors just starting out. That said, if you are already in the financial product universe of E*TRADE or TD Ameritrade, then sticking with that one for the robo-advisor function may be the least-effort solution given that they are so evenly matched. If you aren’t currently affiliated, it may be worth your time to broaden your robo-advisor search.
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