E*Trade is one of the top online brokerages, and in addition to its robust trading platform, E*Trade has launched a robo-advisory service that gives clients direct access to licensed financial advisors.
E*Trade Core Portfolios offers automated investment management for both taxable brokerage accounts and IRAs. For a low annual fee, E*Trade will create a risk-relevant portfolio made up of low-cost ETFs that is automatically rebalanced over time.
E*Trade Core Portfolios Overview
| Feature | Details |
| Account Fees | 0.30% AUM fee $75 fee to transfer out, $25 for a partial transfer out |
| Expense Ratios | 0.06% to 0.25% for ETFs |
| Account Minimums | $500 |
| Investment Options/Choices | ETFs from iShares, Vanguard, and JP Morgan Socially responsible portfolios including ETFs from iShares Smart beta portfolios designed to outperform index fund investing |
| Investment Account Options | Investment Account Options IRA, Roth IRA, SEP IRA, Rollover IRA |
| Portfolio Construction | Semi-annual automatic portfolio rebalancing on all accounts. |
| Tax Strategy | No tax-loss harvesting is available |
| Customer Service and Support | Access to licensed financial advisors Monday - Friday, 8:30 a.m. to 8:30 p.m. EST 24/7 phone support available |
| Mobile Compatibility | Well-designed mobile app for monitoring and managing account |
| Account Setup | Simple account set up, all done online. To open an account, you can sign up with your email address, answer a few questions about risk tolerance, and fund your account. |
| Security | Bank-grade data protection, 256-bit encryption, two-factor authentication. Fingerprint or facial recognition lock on the mobile app SIPC insurance up to $500,000, additional insurance by London Insurance up to $600 Million |
| Ease of access | E*Trade Core Portfolios clients can easily access their accounts on web browsers and through the mobile app. |
What is E*Trade Core Portfolios?
E*Trade Core Portfolios is a robo-advisory service that allows investors to have their taxable brokerage or IRA investments managed by E*Trade. The Core Portfolios offering is a low-cost way to invest, building a portfolio of ETFs based on your age, risk tolerance, and financial goals.
Clients gain access to licensed financial professionals, who can consult on financial and investing questions, as well as help set up or adjust a client's portfolio.
How E*Trade Core Portfolios Works
Clients can sign up for E*Trade Core Portfolios service online by creating a free E*Trade online account.
Clients are then prompted to answer a series of questions about risk, including example scenarios and graphs to help them understand the risks of investing. After the questionnaire, a suggested portfolio of low-cost ETFs is presented, and a client can make any final adjustments before completing account setup, including adding in socially responsible investment (SRI) ETFs or a Smart beta ETF.
Once the account is created, clients will fund the account ($500 minimum required), and the money will be invested according to the portfolio selected.
Clients can also set up recurring investments to the account. After the initial investment is made, clients can adjust their portfolio through the client dashboard, or by calling E*Trade directly.
Main Features
E*Trade Core Portfolios checks most of the boxes of standard robo-advisory services, but with the added bonus of access to licensed financial advisors (during business hours). Here are a few of the main features that E*Trade Core Portfolios offers.
Automatic Rebalancing
Portfolios are managed by E*Trade Capital Management, which employs advanced algorithms based on modern portfolios theory (MPT). This includes automatically rebalancing accounts on a semi-annual basis, as well as when there are deposits into the account.
This rebalancing helps keep the portfolio aligned with the desired asset allocation, as well as keep a smaller balance in cash to avoid "cash drag" on the portfolio. In fact, only 1% of the portfolio is kept in cash, with all other funds invested.
Access to License Financial Advisors
E*Trade has licensed financial advisors on staff with Series 66 and Series 7 licenses to help answer any financial questions a client may have. This includes questions about investing, retirement, debt payoff, and financial goal-setting.
Low-Cost ETFs
E*Trade relies on low-cost ETFs to build its portfolios, including offerings from JP Morgan, iShares, and Vanguard. It also gives investors the option to select a mix of socially responsible ETFs as well as a Smart Beta ETF, which is actively managed and designed to outperform the market.
Costs associated with most of the ETFs are under a 0.10% annual fee, with the exception of the SRI and Smart Beta ETFs, which are around a 0.25% annual fee.
Excellent Customer Service
E*Trade customer service is available by phone 24/7, with additional access to licensed financial advisors from Monday - Friday, 8:30 a.m. to 8:30 p.m. EST. Representatives are also available by email or online via live chat.
E*Trade also has a vast library of educational tools and videos, available to Core Portfolios customers.
Who E*Trade Core Portfolios is Best for
E*Trade Core Portfolios is designed to be a hands-off investment for people that want their portfolio fully managed at a low annual cost. Its goal-setting capabilities aren't the greatest (limited settings), and the service is really ideal for those looking to invest toward retirement.
E*Trade Core Portfolios is comparable to other robo-advisory services in how it invests, but for individuals who want phone access to a licensed financial professional to ask questions, E*Trade is a decent option. While you aren't assigned an investment advisor, you can talk to one on the phone or via email, and get financial advice without the high cost of hiring an investment advisor directly.
Is E*Trade Core Portfolios Legit?
Yes. E*Trade is a long-standing online broker with a large team of financial professionals, and its Core Portfolios robo-advisory service offers automated investment management. Its SIPC insurance matches the industry standard ($500,000), but it also offers additional insurance of up to $600 million for large portfolios. And, it also offers bank-level security on its website and mobile app to protect clients' information.
E*Trade also offers a suite of educational tools, and access to licensed financial advisors, giving customers confidence in their investing approach.
How to Get Started
To get started with E*Trade Core Portfolios, you can sign up for a free account, and walk through the risk-related questionnaire. Then you can select which type of account to open, and fund your account, all online.
For existing E*Trade customers, brokerage accounts and IRAs can be converted to Core Portfolios accounts without any additional fees or commissions. But be aware that the Core Portfolios' robo-advisor may sell and buy securities to align your account with the recommended portfolio, potentially triggering a taxable event.
Pros and Cons
Pros
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Access to low-cost ETFs
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Access to licensed financial advisors
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Access to the entire E*Trade educational library
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SRI ETF options
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24/7 customer service
Cons
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No tax-loss harvesting
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Higher expense ratio than some other robo-advisor services
E*Trade Core Portfolios Alternatives
E*Trade Core Portfolios is a decent robo-advisory service, offering direct access to financial advisors if needed, but it may not be the best fit for everyone. Here are a few alternative robo-advisors that may work better for you.
Vanguard Personal Advisor
Vanguard is one of the leaders in investment management, and its hybrid robo-advisory Personal Advisor service offers the best of both worlds. Portfolios are managed via its robo-advisor algorithm, but clients also gain direct access to Certified Financial Planners® for financial advice. With a low 0.30% expense ratio and access to some of the lowest-cost ETFs available on the market, Vanguard's Personal Advisor service is a great option for investors.
Read our full review on Vanguard Personal Advisor.
Wealthfront
Wealthfront is our top robo-advisory pick, offering fully automated management of your finances, including its Self Driving MoneyTM feature. With a low 0.25% management fee, a host of goal-setting features, and a wide range of investment options, Wealthfront is a great option for both retirement investing and other financial goals. Wealthfront does not offer access to financial advisors but relies on its robust algorithm and wide range of online tools to help users maximize their investments.
Read our full review on Wealthfront.
Betterment
Betterment is one of the first robo-advisory services to launch online and offers a wide range of portfolios to choose from, including multiple SRI portfolios. With a 0.25% annual fee and $100 minimum to get started, Betterment is our favorite robo-advisor for beginners who are just getting started with investing. Betterment also offers a cash account, tax-loss harvesting, and an easy-to-use mobile app.
Read our full review on Betterment.
Summary
E*Trade Core Portfolios is a solid robo-advisory platform that offers automated investing at a low price. With a range of low-cost ETFs and even SRI investment options, E*Trade helps users broadly diversify their investments automatically. E*Trade also offers access to licensed financial professionals, great for individuals who want a trained financial advisor in their corner.
E*Trade Core Portfolios offers a simple investing strategy, but it does not include tax-loss harvesting, and it's rebalancing approach may trigger taxable events. Overall, E*Trade is great for those who want a hands-off approach to investing, with a focus on long-term goals and retirement.
