E*TRADE Core Portfolios Review
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice, and in 2017 he received the SABEW Best in Business Award.
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It wasn't long ago that you had only two basic choices when it came to investing. You could choose your own stocks, bonds, or mutual funds to invest in, or you could hire a financial advisor to invest on your behalf.
Technology has advanced since then, and so has the world of investing. The so-called “robo-advisor” gives investors custom-tailored investment portfolios for a fraction of the cost of hiring a human financial advisor.
Most major online brokers have introduced their own robo-advisor platforms, and E*TRADE's version is called E*TRADE Core Portfolios. In this review, we'll take an in-depth look at how the Core Portfolios robo-advisor platform works, what it costs, and its features.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
With great access to customer service, low-cost investments, and automatic rebalancing, E*TRADE Core Portfolios is a great option for anyone with at least $500 to start investing.
$0 per trade, management fee 0.30%, expense ratio 0.06%-0.12%
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.
Reasonable account minimum: E*TRADE requires a $500 initial investment, which is on the lower end of the range for 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: Like most other robo-advisors, E*TRADE offers periodic rebalancing of client accounts to maintain the target asset allocation. E*TRADE rebalances only twice a year, significantly less frequently than some rivals, but it's still a nice feature.
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 Core Portfolios account. Any existing E*TRADE account can also be easily converted into a Core Portfolios account.
What could be improved
Management fee: E*TRADE Core Portfolio 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.
No tax-loss harvesting: Unlike some of its competitors, E*TRADE Core Portfolios doesn't offer tax-loss harvesting strategies, which can save many investors a lot on their taxes. The platform does offer a portfolio of tax-sensitive ETFs specifically designed for clients who are worried about tax implications, but this is still a downside of E*TRADE's offering.
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.
How E*TRADE Core Portfolios works
New clients fill out a quick but thorough questionnaire to help E*TRADE assess their risk tolerance and investment goals. Then 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 semi-annually to make sure the target investment allocation is maintained, and accounts integrate nicely with other E*TRADE brokerage and bank accounts.
Pricing and fees
Like most robo-advisors, E*TRADE Core Portfolios has two types of ongoing investment fee. 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.
|Service/Item||E*TRADE Core Portfolios Cost|
|Account management fee||0.30%|
|Investment fund fees||0.06%-0.12%|
|Other account charges||$75 transfer-out fee|
Customer service and support
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 a 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.
Alternatives to consider
There's no perfect robo-advisor for everyone, and there are alternatives to E*TRADE Core Portfolios that might be better for certain investors.
If you're looking for alternatives, you might consider SoFi Automated Investing. Like E*TRADE Core Portfolios, SoFi's robo-advisor platform offers customized portfolios of low-cost ETFs, but with no management fees whatsoever. And customers get unlimited access to financial advisors as well as discounts on SoFi loan products.
|Feature||E*Trade Core Portfolios||SoFi Automated Investing|
|Access to Financial Advisors||No||Yes|
E*TRADE Core Portfolios is right for you if:
- You are an existing E*TRADE customer (brokerage or banking) and want to keep your finances in one place.
- 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, and aren't worried about tax-optimization strategies.