Friday, 14 May 2021

TD Ameritrade Essential Portfolios Review 2019

TD Ameritrade Essential Portfolios Review 2019
28 Jan

TD Ameritrade has a long history of helping investors. But they’re somewhat new to the robo-advising game.

The Essential Portfolios is TD Ameritrade’s robo-advisor option. It aims to attract young investors who like the idea of letting their investments grow on their own with minimal attention. The Essential Portfolios is an alternative to other robo-advisors on the market today.

Like other robo-advisors, you’ll complete a questionnaire to see what kind of investor you are. The Essential Portfolios puts your cash into low-cost exchange-traded funds (ETFs). This is a quick and easy way to diversify your portfolio without much work from you.

Who should consider TD Ameritrade Essential Portfolios?

Robo-advisors are a good option for investors who don’t have the time, energy or expertise to micromanage their investments. Essential Portfolios is great for investors who prefer to invest passively.

Because it’s part of TD Ameritrade, you get the easiness of a hands-off robo-advisor and the chance to talk to a financial professional, if needed. For investors who prefer the help of a human, you might choose this over another robo-advisor.

Their laundry list of account types is another big draw. Individual retirement accounts (IRAs) are a common offering. But Essential Portfolios also offers joint and guardianship accounts. This expands their reach even more.

TD Ameritrade Essential Portfolios fees and features

Account minimum
Management fees
  • 0.30% annual advisory fee
Current promotions

Trade commission-free for 60 days + get up to $600

Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • Solo 401k (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
  • 8 asset classes
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detail Customers are automatically enrolled in tax loss harvesting with no additional cost. Portfolios are monitored daily for tax loss harvesting opportunities.
Offers fractional shares
Ease of use
Mobile app iOS, Android
Customer support Phone, 24/7 live support, Email, 360 branch locations

Strengths of TD Ameritrade Essential Portfolios

  • An account type for everyone: Individual taxable accounts and IRAs are one thing, but the Essential Portfolios offers a ton of other accounts for investors. If you need a joint taxable account, trust or conservatorship account, you can get that here. The list of account types is exceptional and longer compared to many industry competitors. For example, the Essential Portfolios offers a Coverdell Education Savings Account while competitor Wealthfront does not.
  • One straight-up fee: While other TD Ameritrade accounts have additional fees, the Essential Portfolios only has one — a 0.30% annual advisory fee. This is a little more compared to other robo-advisors. Wealthfront and Betterment have a 0.25% fee.
  • Tax-loss harvesting: If a particular investment isn’t performing well, Essential Portfolios will sell it at a loss and replace it with a better-performing one in an attempt to offset capital gains tax liabilities. While losing money isn’t ideal, the goal is to rebound with the new investment quickly so you aren’t down for very long.
  • Round-the-clock support: If you can’t make it into one of their 360 branches, you can chat with a financial professional anytime. Essential Portfolios lets you call, email or live-chat 24/7.
  • Socially responsible investing: If you want your money to go beyond long-term earnings, this is a great perk. The Essential Portfolios offers environmental, social and governmental investment principles. For investors that are looking to make a difference but don’t have mega cash donations to back it up, this might entice you to join TD Ameritrade. A little bit can go a long way.

Drawbacks of TD Ameritrade Essential Portfolios

  • Limited asset classes: TD Ameritrade doesn’t lie when they say it’s the “essentials.” They offer eight asset classes while Betterment offers 12. The more asset classes available, the more spread out your money is. The less offered, the more money you could stand to lose if something goes wrong, like a stock market crash.
  • Minimum account requirement: Essential Portfolios requires at least a $5,000 investment to start using the service. Competitors in the market can capitalize on lower (or no) minimums where TD Ameritrade requires thousands of dollars. Wealthfront only requires $500 and Betterment doesn’t even have a minimum.

Is TD Ameritrade Essential Portfolios safe?

All investments carry risk, even robo-advisors like the TD Ameritrade Essential Portfolios. But TD Ameritrade has been around for 40 years and is a leader in the investing space.

TD Ameritrade guarantees you’ll get your money back from unauthorized activity on your account. They’re a member of the FDIC and SIPC with more than $1.8 billion in assets under management. This should give you the peace of mind that, should anything happen, your money is safe in case of a breach.

Final thoughts

As you compare Essential Portfolios to other robo-advisors, keep product offerings in mind. Access to lots of different account types, minimal fees and socially responsible investing are all good reasons to sign up.

But a high minimum opening investment could turn you away. Other companies offer many of the same highlights as Essential Portfolios, but with a much smaller account balance. If you’re just starting your investment journey, $5,000 is a lot and might keep you from signing up.

Although, if you have the cash, it may be worthwhile. The expert help available to customers 24/7 is a big reason to use a company with some clout. For current TD Ameritrade customers, this is an easy addition to your other accounts. For those who are looking to make the switch, their lengthy history serving investors might be enough to grab your attention — and money.

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Dori Zinn
Dori Zinn |

Dori Zinn is a writer at MagnifyMoney. You can email Dori here


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