Td Ameritrade's Essential Portfolio: What Etfs Are In Focus?

TD Ameritrade Essential Portfolios is a robo-advisor service that offers automated digital investment advice and portfolio management. The service typically invests in a small number of low-cost ETFs, covering a broad range of asset classes, including U.S. equities, international developed equities, emerging markets equities, U.S. bonds, and non-U.S. bonds. The ETFs used in the portfolios are selected based on recommendations from Morningstar Investment Management and have low expense ratios, ranging from 0.06% to 0.08%. While the service does not offer direct access to human advisors, it provides 24/7 customer support and access to TD Ameritrade's other investment services, such as trading in stocks, bonds, mutual funds, and ETFs.

TD Ameritrade Essential Portfolios is a robo-advisor with a large variety of account types

Essential Portfolios offers one of the most extensive selections of portfolio options among the best robo-advisors. Investors can choose from five Socially Aware Portfolios, which focus on environmentally and socially friendly companies, as well as a number of core portfolio options.

The robo-advisor stands out from its competitors by offering one of the most expansive lists of account types. It supports a long list of account types, including individual and joint brokerage accounts, Essential Portfolios IRA (traditional, Roth, rollover, SEP, or SIMPLE), Coverdell ESA, trust, solo 401(k) (traditional or Roth), custodial, or business account.

Essential Portfolios is based on the Modern Portfolio Theory (MPT) and uses sophisticated software to build a diversified portfolio that balances risk with reward. It seeks to optimise expected returns based on how much risk someone is willing to take.

To get started, users need to fill out a questionnaire that covers topics such as financial aspirations, goals, timelines, and risk tolerance. The answers are then used to match the user with one of the five portfolios offered.

In addition to a diverse range of portfolios and account types, Essential Portfolios also offers features such as automatic rebalancing and tax-loss harvesting. It provides customer support through various channels, including phone, email, live chat, Facebook, and Twitter.

While TD Ameritrade Essential Portfolios has a relatively high management fee and account minimum compared to competitors, it makes up for this with low-cost ETFs and advanced offerings. The robo-advisor is a solid choice for those seeking a simple, fully automated portfolio from a reputable brokerage.

It offers a great portfolio selection and in-person help, but has a high account minimum

TD Ameritrade Essential Portfolios is a robo-advisor service that offers a great portfolio selection and in-person help, but has a high account minimum. It is a good fit for hands-off investors who want access to a diverse set of portfolio options and account types.

The robo-advisor service has one of the most extensive selections of portfolio options among its competitors. Investors can choose from five Socially Aware Portfolios, which focus on environmentally and socially friendly companies, as well as a number of core portfolio options. The Socially Aware Portfolios are constructed using some of the cheapest socially responsible ETFs.

TD Ameritrade Essential Portfolios also stands out for its large branch network, with over 100 physical locations across the United States, providing in-person customer support.

However, the account minimum for TD Ameritrade Essential Portfolios is $5,000, or $500 with a commitment to make automatic deposits. This high minimum could be a turn-off for newer investors who may not have a lot of capital to commit.

Overall, while TD Ameritrade Essential Portfolios offers a great portfolio selection and in-person help, its high account minimum may be a drawback for some investors.

It uses low-cost ETFs to construct client portfolios

TD Ameritrade Essential Portfolios is a robo-advisor service that provides automated, digital investment advice and portfolio management. It constructs client portfolios using low-cost exchange-traded funds (ETFs), with annual expense ratios ranging from 0.06% to 0.08%. These ETFs are selected from Vanguard and BlackRock's iShares, and are chosen based on recommendations from Morningstar Investment Management, an independent investment research firm.

The ETFs used by TD Ameritrade Essential Portfolios cover five to six asset classes, including U.S. equities, international developed equities, emerging markets equities, U.S. bonds, and non-U.S. bonds. This limited number of asset classes is intended to keep the portfolios simple and easy to understand, covering the basics for clients. The ETFs offer low expense ratios, providing returns that meet the company's goals while minimising costs for investors.

By using low-cost ETFs, TD Ameritrade Essential Portfolios offers a competitive management fee of 0.30%, which is in line with other robo-advisor services. This fee structure, along with the use of non-proprietary ETFs, demonstrates TD Ameritrade's commitment to providing unbiased investment advice and keeping costs low for its clients.

In addition to the core portfolios, TD Ameritrade also offers Socially Aware Portfolios, which focus on environmentally and socially responsible companies. These portfolios have slightly higher expense ratios, ranging from 0.10% to 0.17%, but are still considered affordable compared to similar offerings.

Overall, TD Ameritrade Essential Portfolios' use of low-cost ETFs allows it to construct client portfolios that are well-diversified, simple to understand, and cost-effective, making it a competitive option in the robo-advisor space.

It offers automatic and free tax-loss harvesting

Tax-loss harvesting is a strategy that involves selling investments that have declined in value and reinvesting the capital elsewhere to offset taxable gains on other investments. This process is complex and was previously reserved for those who could afford a professional money manager. However, TD Ameritrade Essential Portfolio offers automatic and free tax-loss harvesting to all its clients, regardless of their account size. This sets it apart from competitors, such as Schwab Intelligent Portfolios, which offer tax-loss harvesting only to clients with $50,000 or more of invested assets.

The tax-loss harvesting feature of TD Ameritrade Essential Portfolio can save investors hundreds of dollars in taxes. When filing taxes, harvested losses can be used to offset up to $3,000 of capital gains or taxable ordinary income. This makes it particularly beneficial for those in higher tax brackets.

The process of tax-loss harvesting with TD Ameritrade Essential Portfolio is automated. The platform scans portfolios to identify investments that have declined in value, sells these securities, and replaces them with new investments, generating a loss. This loss then offsets the impact of taxable gains.

In addition to tax-loss harvesting, TD Ameritrade Essential Portfolio also offers other features such as a large branch network, low-cost ETFs, and frequent rebalancing. The management fee is on the higher end at 0.30%, and there is a $5,000 minimum investment requirement.

Overall, the tax-loss harvesting feature of TD Ameritrade Essential Portfolio is a valuable tool for investors looking to minimise their tax burden, especially when coupled with the platform's other benefits and features.

It has a large branch network with over 100 physical locations

TD Ameritrade Essential Portfolios is a robo-advisor service with a large physical presence. It has over 100 physical locations across the United States, with more than 275 branches in total. This extensive branch network is a notable feature, as few other brokers or robo-advisors can match this level of physical accessibility.

The availability of physical locations is particularly beneficial for customers who prefer in-person assistance and support. TD Ameritrade's large branch network enhances its customer service capabilities, providing an additional channel for clients to receive help and advice. This is especially advantageous for those who prefer face-to-face interactions over digital or phone communications.

The physical locations offer a convenient option for customers who wish to discuss their investments, seek advice, or resolve any issues in person. This accessibility can be crucial for clients who feel more comfortable with traditional, in-person banking services, ensuring they can access the support they need in a familiar way.

Furthermore, the presence of these branches across the country reinforces TD Ameritrade's position as a well-established and reputable financial institution. The extensive network demonstrates the company's commitment to providing comprehensive services and ensuring convenience for its clients, no matter their location within the United States.

In summary, TD Ameritrade's large branch network, with over 100 physical locations, is a significant advantage, offering enhanced customer service, accessibility, and a traditional banking experience to its clients.

Frequently asked questions