TD Ameritrade Essential Portfolios Review 2021: Pros, Cons and How It Compares

Ed. note: TD Ameritrade was acquired by Charles Schwab in 2020. As part of that transition, TD Ameritrade Essential Portfolios is no longer taking new clients. Existing clients will continue to have access to the service.

Arielle O'SheaJun 24, 2021
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Our Take

4.0

NerdWallet rating 

The bottom line: The robo-advisor from TD Ameritrade charges a 0.30% annual management fee and requires a $5,000 minimum investment. TD Ameritrade also offers a socially aware portfolio.

TD Ameritrade Essential Portfolios

TD Ameritrade Essential Portfolios

Fees

0.30%

management fee

Account Minimum

$5,000

Promotion

None

no promotion available at this time

Pros & Cons

Pros

  • Low investment expense ratios.

  • Competitive management fee.

  • Niche account types.

  • Morningstar-built portfolios.

Cons

  • Small portfolios.

  • High account minimum.

Compare to Other Advisors

Betterment
SoFi Automated Investing
Vanguard Digital Advisor
NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Fees

0.25%

management fee

Fees

0%

management fee

Fees

0.15%

per year (approximately)

Account Minimum

$0

Account Minimum

$0

Account Minimum

$0

Promotion

Up to 1 year

of free management with a qualifying deposit

Promotion

Free

career counseling plus loan discounts with qualifying deposit

Promotion

No advisory fees

your first 90 days of Vanguard Digital Advisor investment management (Enrollment requires a Vanguard account with a minimum of $3,000)

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Full Review

Editor's note: TD Ameritrade was acquired by Charles Schwab in 2020. As part of that transition, TD Ameritrade Essential Portfolios is no longer taking new clients. Existing clients will continue to have access to the service. For alternative options, consult our list of the best robo-advisors

TD Ameritrade is the behemoth behind one of our top picks for best online brokers. So it’s no surprise that its service for the hands-off set — TD Ameritrade Essential Portfolios — is a competitive player in the ever-expanding world of robo-advisors.

As the name implies, Essential Portfolios focuses on providing just the essentials — a diversified portfolio built with exchange-traded funds. The service’s $5,000 minimum investment requirement puts it at the higher end among peers, but its 0.30% management fee is competitive. Investors who set up recurring deposits can open an account for a reduced minimum of $500.

TD Ameritrade Essential Portfolios is best for:

  • Hands-off investors.

  • Large account choice.

  • Low-cost ETFs.

  • Socially conscious investors.

TD Essential Portfolios at a glance

Account minimum

$5,000. Investors who sign up for recurring deposits can open an account with $500.

Account management fee

0.30%.

Investment expense ratios

Average 0.06%.

Account fees

Full transfer: $75. No fee for a partial transfer.

Portfolio mix

Portfolio mix is well-diversified but lacks exposure to non-market correlated assets like REITs and commodities.

Socially responsible portfolio option

Socially Aware portfolio available for no extra fee.

Accounts supported

• Individual and joint nonretirement accounts. • Roth, traditional, SEP, SIMPLE and rollover IRAs. • Coverdells. • Trusts. • Solo 401(k)s and Solo Roth 401(k)s. • Nonprofit corporation accounts. • Profit-sharing plans. • UGMA/UTMA. • Business accounts with $100,000 minimum (S-corp, C-corp, LLC, partnership, unincorporated) and more.

Tax strategy

Free tax-loss harvesting on all accounts.

Automatic rebalancing

Annually and on an as-needed basis.

Human advisor option

None.

Bank account/cash management account

Not available.

Customer support options (includes website transparency)

Phone, email and chat support Monday to Friday 7:30 a.m. to 7 p.m. Central. In-person at branches during regular business hours.

Where TD Ameritrade Essential Portfolios shines

Morningstar-built portfolios: As online brokers have entered the robo-advisory field, some have used their own funds to build portfolios, effectively lining their pockets twice with fund expenses and management fees. TD Ameritrade doesn’t have its own funds, so the funds here are nonproprietary. They were recommended by Morningstar Investment Management, a well-respected investment research and advisory firm. (Morningstar is a NerdWallet advertising partner.)

Morningstar’s guidance here can help investors feel confident that the funds used were chosen because they’re a good fit for the portfolios and risk goals. They also happen to have extremely low expense ratios: Funds carry an average cost of just 0.06%.

Competitive management fee: This is another key fee for investors to compare. TD Ameritrade Essential Portfolios' 0.30% management fee puts it in line with other robo-advisors launched by online brokers: E*TRADE Core Portfolios also charges 0.30%; Fidelity Go's fee — which includes investment expenses — is 0.35% for balances of $50,000 or more (below that threshold, Fidelity is free for balances under $10,000 and $3 per month for balances between $10,000 and $49,999); and Merrill Edge Guided Investing charges 0.45%.

That said, it is higher than two of the most popular independent offerings: Betterment and Wealthfront both charge a 0.25% management fee for their basic offerings.

Account choice: This is the longest list of account types we’ve seen from a robo-advisor, including business accounts, which are rarely managed by robo-advisors. No matter what kind of account you’re looking for, Essential Portfolios probably manages it.

Socially Aware portfolio choice: Investors interested in aligning their investment choices with their values will appreciate TD's Socially Aware Portfolios offering as an alternative to the core portfolios. Investments are chosen based on ESG (environmental, social and governance factors) and made up of ETFs composed of companies that score high in those categories. Like the core portfolios, the exact investment mix reflects the client's risk tolerance (conservative, moderate, moderate growth, growth and aggressive).

Thoughtful onboarding process: Like other robo-advisors, Essential Portfolios sends clients through an initial questionnaire to gauge risk tolerance, time horizon and investment goals, which are then used to recommend one of five ready-made portfolios. The series of questions attempts to assess an investor’s general financial picture, asking how many months' worth of income are available in savings and whether you plan to make withdrawals from the portfolio before reaching your goal.

You can also toggle through various portfolio choices, viewing the recommendations for levels of risk tolerance before selecting one. The service then serves up predictions for expected volatility for each portfolio, along with the probability of accumulating various account balances.

Additional investment management services: If you find that the Essential Portfolios tier doesn’t suit your needs, TD Ameritrade offers two additional types of managed portfolios, Selective Portfolios and Personalized Portfolios, each with a higher degree of advisor access.

Where TD Ameritrade Essential Portfolios falls short

High account minimum: For a straight digital robo-advisor, a $5,000 account minimum is on the high end of the spectrum — there are services that require no minimum investment. However, TD Ameritrade does allow investors to open an account with $500 if they set up recurring deposits.

Small portfolios: These are bare-bones portfolios, as the name of the service implies. The funds that are included cover domestic U.S. stocks, international stocks, domestic U.S. bonds and international bonds. These portfolios lack exposure to real estate investment trusts and commodities, asset classes that some other robo-advisors cover.

Is Essential Portfolios right for you?

The field of robo-advisors has gotten crowded in recent years, to the point where many of these services are beginning to look the same. With Essential Portfolios, the pricing (0.30% management fee), service offerings (tax-loss harvesting) and portfolios (low investment expense ratios) are comparable to other services on the market.

A standout feature — what you won’t find at most other robo-advisors — is the exhaustive list of account types. Overall, Essential Portfolios is a solid option for a hands-off digital solution.

Disclosure: The author held no positions in the aforementioned securities at the original time of publication.

Dayana Yochim contributed to this review.


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