E*TRADE Core Portfolios Review: Top Broker With Focused Investments

Most major online stock brokers have introduced their own robo-advisor platforms, and E*TRADE's version is called E*TRADE Core Portfolios. Importantly, the robo-advisor shines with its customer service, competitive fees, and low account minimum of just $500. In this E*TRADE Core Portfolios review, we'll take an in-depth look at how this robo-advisor platform works, what it costs, and its features.

This robo-advisor is a good fit for: Hands-off investors who want to put their investments on cruise control and manage their money needs under one roof.

Top perks

Customer service

E*TRADE Core Portfolios has a highly rated customer service department and flexible support hours. Clients and potential clients can speak with a specialist weekdays from 8:30 a.m. until 8:30 p.m. EST.

Low account minimum

E*TRADE requires a $500 initial investment, which is on the lower end of the range among the best robo-advisors -- some don't have a minimum deposit requirement, while others require minimums of $5,000 or more.

Low-cost investments

E*TRADE Core Portfolios invests client assets in portfolios made up of low-cost exchange-traded funds, or ETFs, which have underlying expense ratios ranging from 0.06%-0.12%.

Portfolio choice

In addition to its standard customized portfolio options, E*TRADE Core Portfolios allows investors to choose specific focuses, such as tax-advantaged portfolios and strategies that exclusively invest in socially-responsible ETFs.

Automatic rebalancing

Unlike robo-advisors that periodically rebalance portfolios once or twice a year, E*TRADE automatically rebalances portfolios that drift too far from investment targets, typically 5% or more.

Integrates with other E-TRADE accounts

E*TRADE Core Portfolios integrates with other accounts on E*TRADE's platform, which allows clients to see all of their accounts in one place, and facilitates smooth transfers into and out of the E*TRADE Core Portfolios account. Any existing E*TRADE account can also be easily converted into an E*TRADE Core Portfolios account.

Tax-loss harvesting

Unlike some of its competitors, E*TRADE Core Portfolios offers tax-loss harvesting strategies, which can save many investors a lot on their taxes. The platform also offers a portfolio of tax-sensitive ETFs specifically designed for clients who are worried about tax implications. This feature is limited to taxable E*TRADE Core Portfolios accounts.

What could be improved

Management fee

E*TRADE Core Portfolios charges a 0.30% annualized management fee, far lower than you'd pay for a human financial advisor, but on the higher end of our favorite robo-advisor platforms.

Access to human advisors

According to E*TRADE's website, "For Core Portfolios clients, interaction with E*TRADE Capital Management will generally be limited to the web-based interface." You can speak with a Core Portfolios specialist, but this is more along the lines of technical support, not financial advice.

E*TRADE's application process is seamless, making it a great broker for beginners who are filling out a new brokerage account application for the first time. New clients first fill out a quick but thorough questionnaire to help E*TRADE assess their risk tolerance and investment goals. Next, clients see a recommended portfolio, plus an alternative. For example, E*TRADE might think you have a high risk tolerance based on the questionnaire, but if the recommended portfolio seems too risky, there's a second option that might be a better fit.

There are some customization options, including tax-advantaged investments, investing exclusively in socially-responsible companies, or using so-called "Smart Beta" ETFs to potentially boost returns. You can also open an E*TRADE Core Portfolios account as a standard individual or joint brokerage account, a custodial account, or an individual retirement account (IRA).

Once you've accepted a portfolio option, chosen customizations, and made your opening deposit, you can start investing with a simple click of the mouse. E*TRADE monitors portfolios and rebalances them automatically to make sure the target investment allocation is maintained, and accounts integrate nicely with other E*TRADE brokerage and bank accounts.

Like most robo-advisors, E*TRADE Core Portfolios has two types of ongoing investment fees. You'll pay a flat management fee to E*TRADE, equal to 0.30% of your assets per year. This translates into $3 for every $1,000 in your account. In addition, your portfolio's investment funds (exchange-traded funds, or ETFs) have their own fees, known as expense ratios.

In terms of all-in pricing, E*TRADE is in the middle of the pack when it comes to our favorite robo-advisors. The account management fee is on the higher end, while its ETFs are quite reasonably priced.

There are two types of support that robo-advisor clients might need -- investment advice from a human being, and help with technical issues. Here's how E*TRADE Core Portfolios stacks up.

When it comes to technical support, E*TRADE Core Portfolios shines. It has a highly rated customer service department, and the hours are flexible. You can call and talk to an E*TRADE Core Portfolios specialist anytime from 8:30 a.m. until 8:30 p.m. EST.

On the other hand, E*TRADE Core Portfolios clients generally don't have access to human financial advisors. Some rival robo-advisors provide access to financial planners who can provide guidance if, say, a client wants to save to buy a house. E*TRADE Core Portfolios clients don't get this level of advice.

• You value good customer service.
• You want to keep your finances in one place and are an existing E*TRADE customer (E*TRADE brokerage or banking), or want to move assets to the broker.
• You want to invest in socially responsible companies or Smart Beta ETFs that can potentially boost long-term returns.
• You have at least $500 to start investing.
• You aren't concerned with getting financial advice from a human advisor.

At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and account types; however, we also take into account features like research, education, tax-loss harvesting, and highly rated mobile apps. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.

See our full methodology here: Ratings Methodology