TD Ameritrade Essential Portfolios Reviews

TD Ameritrade has long received praise from investors who prefer an active trading approach for their innovative online trading platforms.In 2016, they launched a robo-advisor to give customers who prefer a more hands-off approach to investing an option.TD Ameritrade Essential Portfolios reviews are positive, and users are impressed with the fee structure and portfolio options.

To utilize the service, you’ll need a minimum investment of $5,000.Customers payan annual 0.30% management fee and are matched with oneof five portfolio options based on individual investment goals and risk tolerance.

Here, we’ll delve into the details on TD Ameritrade Essential Portfolios to help you better understand the niche they’ve carved out in the marketplace.We’ll examine how the account works, who it’s best suited for, and point out potential drawbacks to consider before signing up.

At A Glance Summary of TD Ameritrade Essential Portfolios

To better understand TD Ameritrade Essential Portfolios, we’ll break down the basics onaccount structure, associated fees, funds managed, and what the service includes.

Account Basics

  • There is a $5,000 account minimum to invest on this platform.
  • You’ll incur a few different fees.These include:
  • 0.30% annual account management fee
  • 0.06% to 0.08% investment expense ratios
  • $75 full transfer out fee.If your account has a balance of over $100,000, you’re exempt from this fee.
  • Free automatic re-balancing is included as part of the service.
  • TD Ameritrade supports many different account types.These include:
  • Individual and joint non-retirement accounts
  • IRA’s- Roth, SIMPLE, SEP, traditional and rollover
  • Trusts
  • Coverdells
  • 401(k)s and Roth 401(k)s
  • Profit-sharing plans
  • Corporation accounts for nonprofits
  • UGMA/UTMA
  • A variety of business accounts with $100,000 minimum like S Corp, LLC, C Corp, Partnership and Unincorporated
  • The portfolio allocations include five funds from iShares and Vanguard and a percentage of cash.

Investment Information

Many online brokers who launch a robo-advisor product have their own proprietary funds where they allocate many of their investments.TD Ameritrade Essential Portfolios in an exception, asthey use non proprietary funds recommended by respected investment research and advisory firm, Morningstar Investment Management.This is important to note as many other brokers who have developed a solution in this space use their own funds to build customer portfolios which effectively allows them to profit twice.One from fund expenses and again from the fund management fees.

However, in this scenario, investors can rest assured that the funds were selected because they were a good match for the risk goals of each portfolio.The Essential Portfolios product uses a mix of iShares and Vanguard ETFs, but it’s limited to just five ETF’s per offering.

How it Works

Like you would expect from a robo-advisor, new clients take an initial assessment that reveals risk tolerance, investment goals, and time horizon.The results produce a recommendation that matches the investor with one of five portfolio options.Users can also navigate through the different portfolio choices to see how the recommendations change based on risk tolerance.

TD Ameritrade Essential Portfolios also provides detailed predictions about what you can expect regarding volatility in each of the five options, as well as the likelihood of accumulating various account balances with the selection.

TD Ameritrade Essential Portfolios Features

TD Ameritrade used their expertise in creating robust trading tools to develop this hands-off investment product.Here are a few features that differ from the competition.

Low Investment Expense Ratios

When you sign on with a robo-advisor, chances are good you’ll allocate a portion of your portfolio to exchange-traded funds (ETFs). TD Ameritrade follows that same model, but with a customer-friendly twist.They offer investment expense ratios ranging from 0.06% to 0.08%, some of the lowest in the marketplace.Combined with their competitive annual management fee, they provide a valuable service at an overall low cost.

Competitive Management Fee

As we mentioned above, TD Ameritrade’s 0.30% annual account management fee is right on par with what you’ll see from other robo-advisors launched by online brokers in the past year.There are options with slightly lower fees on the independent side, but you may need a larger minimum investment to qualify.

Robust Account Choice

While you are limited to just five ETFs in your portfolio, the list of account types you can choose seems endless.If you’re someone who loves having a plethora of choices, including accounts that aren’t typically managed by robo-advisors, the Essential Portfolios product may be the perfect fit.

Potential Drawbacks

When TD Ameritrade launched Essential Portfolios in 2016, they did a thorough job of covering all the bases.There are just a few considerations that might make you think twice before signing up for the services.

No Tax Strategy

The 2016 product soft launch included a stipulation fromTD Ameritrade that they would beadding the feature early in 2017, but asof April, itis not yet available.Tax-loss harvesting is a common feature in robo-advisors that helps investors limit their tax impact by selling off losses to offset gains.Some competitors offer this as a free feature to all their customers while others have a set minimum you need to meet to qualify.  It’s yet unknown which approach Essential Portfolios will take.

Bare Bones Portfolios

TD Ameritrade came up with the name for their robo product because it just includes the essentials.While other advisors may allow you to incorporate 10or more asset classes, with Essential Portfolios you’re limited to five ETFs per portfolio offering.TD Ameritrade believes that this minimalist approach still offers well-diversified options for their clients, but also has a more robust digital advisory option for investors who want more options.

Who Would Benefit

There are a few classes of investors who would make the perfect client on this new TDAmeritrade platform.If you’re someone who wants to have money in the market but doesn’t want to have to monitor it regularly, this is a good hands-off choice.

If you are already familiar with TD Ameritrade products, their Essential Portfolios solution offers a similar look and feel and isan easy transition for a loyalist.

Customers who don’t want to pay high fees also like this option, asdo those who want a large choice of accounts when making their investment selections.

Final Thoughts

Broker-backed robo-advisors are becoming the norm, and most of the companies pay careful attention to what their competitors are doing. While this results in many great choices in the marketplace, it also means that most of the services offer the same things.

Essential Portfolios isno different.Their pricing, portfolios, and services onpar with industry standards, and while they have a few unique aspects, there isn’t a strong call to action to have investors signing upin droves.

That said, they did just launch in late 2016 and had promised some additional features throughout 2017, which gives us something to keep our eye on.In the meantime, the TD

Ameritrade Essential Portfolios reviews all suggest this is a good robo-advisor option for many different types of investors who could benefit from automated account management.

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