TD Ameritrade Essential Portfolios - Short Review

TD Ameritrade Essential Portfolios Overview

TD Ameritrade Essential Portfolios is an automated, online portfolio management service designed for investors seeking a hands-off, low-cost investment solution. Here’s a detailed look at what the product does and its key features:

What it Does

TD Ameritrade Essential Portfolios is a robo-advisor service that allows investors to create and manage a diversified investment portfolio with minimal effort. It is part of TD Ameritrade’s broader suite of financial services, leveraging the company’s extensive resources and expertise.

Key Features

Account Types and Minimum Investment

Essential Portfolios supports a wide range of account types, including taxable accounts, joint accounts, Roth IRAs, traditional IRAs, rollover IRAs, SEP-IRAs, trusts, 529 plans, and custodial accounts. However, it does not support 401(k) accounts. The minimum investment required to open an Essential Portfolios account is $5,000.

Investment Strategy

The service uses the Modern Portfolio Theory (MPT) to build diversified portfolios that balance risk and reward. Portfolios are constructed using low-cost, nonproprietary exchange-traded funds (ETFs) recommended by Morningstar, spanning five asset classes: U.S. equity, international developed equity, emerging markets equity, U.S. bonds, and non-U.S. bonds. Each portfolio allocates 1% of the total assets under management to cash.

Fee Structure

Essential Portfolios charges an annual advisory fee of 0.30% on total assets under management. Additionally, investors pay the expense ratios associated with the ETFs in their portfolio, which range from 0.06% to 0.07% depending on the portfolio type. There are no commission fees for eligible transactions within the investment account.

Automatic Rebalancing and Deposits

The service offers automatic rebalancing at no additional cost, ensuring that the portfolio remains aligned with the investor’s initial asset allocation based on their risk tolerance. Automatic deposits are also available, allowing for seamless and consistent investing.

Goal Planning and Tracking

Investors can set personalized investing goals, such as retirement, education, or wealth building, and track their progress through embedded goal planning and tracking tools. The platform provides a confidence score indicating the likelihood of achieving these goals.

User Experience

Opening an account is straightforward and can be completed in about 15 minutes through the TD Ameritrade website or mobile app. Investors answer a series of questions about their financial goals, risk tolerance, and timeline, which helps in recommending a suitable portfolio. The platform offers easy-to-read performance charts and graphs, as well as real-time access to account information via the TD Ameritrade Portfolios app for iOS and Android devices.

Customer Support

Essential Portfolios provides 24/7 customer support through phone, live chat, and email. Investors also have access to over 100 physical TD Ameritrade locations for in-person assistance. A dedicated Essential Portfolios Specialist team is available to address any queries or concerns.

Additional Benefits

As part of TD Ameritrade, Essential Portfolios users have access to a wide range of trading services, including the ability to trade individual stocks, mutual funds, ETFs, and other securities with competitive fees. The platform also integrates with other TD Ameritrade tools, such as portfolio analysis and tax reporting services like GainsKeeper.

In summary, TD Ameritrade Essential Portfolios is a robust and user-friendly robo-advisor service that offers diversified, low-cost investment portfolios, automatic rebalancing, and comprehensive customer support, making it an attractive option for both new and existing TD Ameritrade customers.