TD Ameritrade Essential Portfolios Review 2019

TD Ameritrade Essential Portfolios Robo Advisor and Selective Portfolios with Human Advisor

TD Ameritrade Essential Portfolios and Selective Portfolios Expert Review – 2019

TD Ameritrade Essential Portfolios is the fully automated robo-advisor program offered by TD Ameritrade, one of the world’s biggest financial institutions. Their Selective Portfolios option is the rebranding of Amerivest as a hybrid robo-advisor with a digital plus human advisor platform. This TD Ameritrade Essential Portfolios Review is unique and also offers expert commentary on the TD Ameritrade Selective portfolios.

Are you curious, “Does TD Ameritrade have robo-advisors?”

The answer is a resounding “yes.” The company recently reported $16.9 billion in AUM in their robo portfolios.

Overall, TD Ameritrade has more than 11 million customer accounts, with more than $1.1 trillion in assets under management (AUM). The company is based in Omaha, Nebraska. It is 42% owned by Toronto Dominion Bank, which is where the “TD” portion of its name derives.

TD Ameritrade Essential Portfolios, the basic robo-advisor was rolled out in 2016 and is referred to in its plural version because it actually includes five different model portfolios. Each portfolio represents a level of risk and is recommended based on the investor’s initial answers to questions about financial goals and risk tolerance, among others. Once a portfolio is chosen for an investor, TD Ameritrade handles all aspects of investing, including periodic rebalancing.

TD Ameritrade Essential Portfolios Robo Advisor and Selective Portfolios with Human Advisor

One of the advantages to using a robo-advisor offered by a major investment brokerage firm like TD Ameritrade is that you can access all the services of a large investment brokerage firm. For example, TD Ameritrade has more than 100 branches located in major metropolitan areas accross the U.S. DIY investors can also trade individual stocks and funds through the brokerage firm at the low rate of $6.95 per trade.

TD Ameritrade Essential Portfolios and Selective Portfolios Robo-advisor Features at a Glance

OverviewEssential Portfolios-Typical goal-based robo-advisor. Selective Portfolios - Robo-advisor + human advisor with passive + active management strategies.
Minimum Investment AmountEssential portfolios and Selective portfolios - require no minimum investment amount.
Fee StructureEssential - 0.30%. AUM
Selective - Depending upon specific portfolio selected + amount of money invested, fees range from .90% to .55% AUM
Top FeaturesDigital and hybrid investment management options. Access to TD Ameritrade products + services.
Free ServicesN/A
Contact & Investing AdviceIn person, phone & email. In person meetings at TD Ameritrade branch. Phone support 24/7
Investment FundsDiversified, low-cost index funds (ETFs + mutual funds) from six different asset classes for Essential + Selective portfolios. Actively managed funds available for Selective portfolios. All funds recommended by Morningstar.
Accounts AvailableIndividual & joint investment accounts. Roth, traditional, SEP, Simple & rollover IRAs. Trusts.
PromotionsNot available at this time.

What Differentiates TD Ameritrade Essential Portfolios Robo-Advisor From Competitors

TD Ameritrade Products and Services – One of the greatest advantages of investing with TD Ameritrade Essential Portfolios is being part of the TD Ameritrade family. Not only do they offer diversified investment brokerage services, but also provide banking services through TD Bank. It is the 8th largest banking institution in the US according to a 2019 Bankrate article, with more than 1,300 branch locations in 15 East Coast states.

Tax-loss Harvesting – This certainly isn’t a unique offer by TD Ameritrade Essential Portfolios, since it’s offered by other robo-advisors. But what makes it stand out is that the service is offered on all taxable accounts, regardless of account balance. Other firms offer the service, but often only on larger account balances. And some robo-advisors – like Vanguard Personal Advisor, and E*TRADE Adaptive Portfolios – don’t offer it at all.

Easy Account Access – TD Ameritrade Essential Portfolios has some unique ways to access your account: Facebook Messenger, Amazon Alexa, or using iPhone X Face ID.

Dividend reinvestment – TD Ameritrade’s dividend reinvestment program, or DRIP, is now available on most ETFs, mutual funds, ADRs, and NASDAQ stocks.

What Differentiates TD Ameritrade Selective Portfolios Robo-Advisor From Competitors

TD Ameritrade Selective Portfolios is more comparable to a traditional financial advisor with a technology investment management add on.

Many Portfolios Available – This robo-advisor plus human advisor offers 15 portfolios across five distinct strategies. To meet certain investment goals, these portfolios might include actively managed options as well as passive index fund strategies.

Financial Consultants – Investors have unlimited access to financial advisors, in-person at a TD Ameritrade branch and by phone. These financial advisors hold Series 7 and Series 66 licenses and might hold the CFP designation. Although other robo-advisors also offer financial advisor access including Betterment and Ellevest.

The financial Consultants assist clients in creating in-depth financial goal plans and engage in broader discussions about a range of wealth management issues.

Who Benefits from the TD Ameritrade Robo-Advisors?

TD Ameritrade Essential Portfolios is beneficial to investors concerned about robo-advisor stability. The robo-advisor trend has been around for less than 10 years, and many of the competitors are standalone platforms that have only been around for a year or two. TD Ameritrade Portfolios has the advantage of being part of one of the largest financial institutions in the world.

Given all of the financial services offered by TD Ameritrade, in conjunction with TD Bank, an investor can have some of their money professionally managed through the robo-advisor(s), while participating in do-it-yourself investing through the larger brokerage service.

TD Ameritrade Essential and Selective Portfolios also offer round-the-clock customer service. This is great if you work odd hours. You can reach a representative by phone or live chat at all hours.

The TD Ameritrade Selective Portfolios are suitable for investors with more complicated financial situations and those investors seeking in depth personal financial planning.

TD Ameritrade Essential Portfolios and Selective Portfolios – Drill Down

All TD Ameritrade Robo-Advisors Include the Following Features:

Tax loss Harvesting. Essential portfolios ETF-based robo-advisor platforms offers tax-loss harvesting on all account sizes. Some Selective ETF portfolios in taxable-accounts also offer tax loss harvesting.

Rebalancing. TD Ameritrade Essential Portfolio and TD Ameritrade Selective Portfolios offer automatic rebalancing. In plain English, this means that your investments are bought and sold to keep your preferred asset mix in line with your initial choices.

Customer Service. 24/7 customer service is unique among robo-advisors and a positive if you work odd hours.

Account Types. The account options are vast including taxable accounts, the full range of IRAs, trusts, custodial accounts and several business IRAs.

TD Ameritrade robo-advisor investments. Unfortunately, TD Ameritrade doesn’t disclose the specific ETFs that are held in each asset class. But they do indicate that they don’t include proprietary ETFs (those offered by TD Ameritrade). The funds included are either from Vanguard or BlackRocks’s iShares, yet are subject to change. They are selected based on recommendations from Morningstar, and have a rock bottom weighted average expense ratio of between 0.06% and 0.08%.

TD Ameritrade Essentials Portfolios Mobile App. The mobile app, called the TD Ameritrade Personal Portfolios App is available with iOS and Android apps.

td ameritrade essentials app robo advisor

TD Ameritrade Essential Portfolios

TD Ameritrade Essential Portfolios Asset Allocations

TD Ameritrade Essential Portfolios are comprised of the following six asset classes:

  • US Equity
  • International Developed Equity
  • Emerging Markets Equity
  • US Bonds
  • Non-US Bonds
  • Cash

There are five different portfolios, and each contains at least a tiny allocation of each asset class, including cash. Cash represents a 1% share of each portfolio.

The five different risk adjusted portfolios are:

  • Conservative
  • Moderate
  • Moderate Growth
  • Growth
  • Aggressive

The asset allocation in each portfolio is described in the table below. The broad asset split between stocks, bonds and cash is listed at the bottom of each column.

Asset Class Conservative Moderate Moderate

Growth

Growth Aggressive
US Equity 13% 22% 29% 41% 51%
International Developed Equity 5% 9% 12% 18% 22%
Emerging Markets Equity 3% 5% 6% 9% 11%
US Bonds 70% 56% 46% 27% 13%
Non-US Bonds 8% 7% 6% 4% 2%
Cash 1% 1% 1% 1% 1%
Stock/Bond/Cash Split 21/78/1 36/63/1 47/52/1 68/31/1 84/15/1

Learn about: Robo-Advisors With Human Financial Advisors 

Socially-Responsible Investing. TD Ameritrade Essential Portfolios also offers socially-responsible investment options. These portfolios focus on “EGS” investment principles that focus on Environmental, Social, and Governance issues.

TD Ameritrade Essential Portfolios Robo-Advisor Sign-up Process

Signing up for TD Ameritrade Essential Portfolios is a simple online process. First, enter your name and age. You will then be prompted to choose your investment goals – retirement, wealth generation, education, or some other purpose. Following this stage, you will also be prompted to choose from a Core Portfolio or a Socially Aware Portfolio.

That’s the beginning of an application process that involves several screens. You’ll need the following information to complete the application:

  • Your date of birth
  • The age at which you expect to reach your desired investment goal
  • The amount of your initial investment, as well as the amount you expect to contribute each month
  • Your current liquid net worth
  • The amount you have in savings, measured by the number of months of income you have saved
  • If you expect to make any withdrawals from your account prior to reaching your investment goal

After you’ve provided that information, you’ll need to determine your risk tolerance. This is based on a question in which you rate your own risk tolerance, lower, fairly low, medium, fairly high, or higher.

The sign-up process offers a valuable feature that enables you to project the probability of attaining your investment goal, based on your initial investment, monthly contributions, and expected rate of return on investment.

Visit the Robo-Advisor Selection Wizard, take a quick quiz, and find out which robo-advisor is the right one for you.

“One of the biggest advantages of Essential Portfolios is the confidence score we give,” says Tom Casey, Senior Manager, Guidance Products, TD Ameritrade. “We assign a number so our clients can better understand the probability of reaching their goal.  The confidence score is based on how much they are willing to invest today, in the future, and the managed portfolio that has been recommended to the client.”

Once the confidence number, or investor score, is defined, you can adjust your investments or increase your monthly contribution to help improve the chances of reaching your goals.

TD Ameritrade Essential Portfolios Fees and Investment Minimums

The Essential Portfolios requires no investment minimum and charges a flat 0.30% AUM fee. This is slightly higher than the .25% charged by Betterment, Wealthfront and Ellevest. While M1 Finance, WiseBanyan, and Schwab do not charge annual management fees for their basic services.

Bonus: Robo Advisor Fees from Lowest to Highest

TD Ameritrade Essential Portfolios Performance

We appreciate that the TD Ameritrade robo-advisors updates performance data. This is unique and can be found on this page. Although, as of this 2019 TD Ameritrade Essential Portfolio update, the performance data was current as of December 2018.

TD Ameritrade Selective Portfolios

Selective Portfolios pair human insights with a more personalized online experience to help you pursue your goals. This investment option is like that of a typical financial advisor with embedded digital investment management features, such as rebalancing and tax-loss harvesting.

Selective Portfolios offer a wider range of investment options than Essential Portfolios.

Selective Portfolios include 4 categories of investment portfolios which include both active and passive strategies:

Core Portfolios include mutual funds or ETFs. The TD Ameritrade Select Core Portfolios incorporate a range of investment styles, sectors, market caps and geographic regions.

Supplemental Income Portfolios are tilted towards fixed income investments with lower volatility and greater dividend payments. This choice is diversified across a range of income-generating asset classes, credit quality and interest rate sensitivity to maximize yields for given risk levels.

This is a suitable portfolio for retirees seeking cash flow.

Opportunistic Portfolios are for those investors that seek to adjust their asset allocation based upon market conditions, in an attempt to beat market returns.

Managed Risk Portfolios are actively managed to create moderate, consistent returns with limited volatility and less exposure to interest rate or stock market risks.

The TD Ameritrade Selective Portfolios offer additional customization, for a price.

TD Ameritrade Selective Portfolios Robo-Advisor Sign-up Process

TD Ameritrade Selective Portfolios Sign Up

TD Ameritrade Selective Portfolios Fees and Investment Minimums

Unlike many other hybrid, digital plus human guided investment managers, TD Ameritrade Selective Portfolios requires no investment minimum.

The management fees depend upon which portfolio is selected and the account value. The Core, Opportunistic and Managed Risk Portfolios fees range from 0.90% to 0.55% AUM for larger accounts. While the Supplemental Income Portfolio fees start at 0.75% AUM and drop to 0.30% for larger accounts.

These fees are in line with those charged by Personal Capital Advisors, which also provides a robust free investment management dashboard for the public.

TD Ameritrade Selective Portfolios Performance

We appreciate that the TD Ameritrade robo-advisors update performance data. This is unique and can be found on this page. Although, as of this 2019 TD Ameritrade Essential Portfolio update, the performance data was current as of December, 2018.

TD Ameritrade Essential & Selective Portfolios Robo-Advisor Pros and Cons

TD Ameritrade Robo-Advisor Pros

  • The TD Ameritrade tie-in provides institutional stability, as well as brokerage and banking services provided through the TD Ameritrade family.
  • 24/7 customer contact by phone or chat. This is a welcome feature with automated investing.
  • Local branches, for investors who prefer face-to-face contact over online/phone only.
  • Essential portfolios have access to financial advisors for basic questions and the Selective customers receive in depth financial planning assistance.
  • Tax-loss harvesting is available on all taxable accounts, regardless of account balance.
  • The Essentials confidence score gives you a quantifiable metric to help determine if your plan is reasonable, or not.
  • No minimum investment required is a solid feature for investors just starting out.
  • The Portfolios use ETFs and mutual funds recommended by Morningstar Investment Management, to remove any proprietary products and bias.
  • The supplemental income portfolios are great for those investors seeking a lower risk, cash flow portfolio. This is rare among robo-advisors and found at Betterment as well.

TD Ameritrade Portfolios Robo-Advisor Cons

  • The Essentials fee structure of 0.30% is in the middle of the basic robo-advisor range, which falls between 0.00% and 0.50%. Popular competitors Betterment and Wealthfront charge just 0.25%. While Wealthsimple offers financial advisors for all clients and charges o.50% AUM.
  • The Selective hybrid fee starting at .90% is on the high end of robo-advisors with human advisor access. Ellevest Premium charges 0.50% and Betterment Premium levies a 0.40% of AUM.
  • The Essentials portfolio allocation is entirely invested in stocks and bonds. Other robo-advisors include real estate and precious metals (Charles Schwab Intelligent Portfolios and Wealthfront), value investing (Charles Schwab Intelligent Portfolios), and alternative investments (M1 Finance).
  • Actual ETFs used in asset allocations are not disclosed until your account is opened. It might be helpful for investors to know specifically which funds their money will be held in.
  • The Essentials minimum initial investment requirement of $5,000 might limit new and small investors.
  • The Selective Portfolios financial advisors are not all CFPs, a higher credential than Series 7 or Series 66 licenses. In contrast, Ellevest and Personal Capital’s financial advisors are all CFPs. However, TD Ameritrade states that their reps are trained to handle typical client questions.

TD Ameritrade Robo-Advisor Review Wrap Up

TD Ameritrade Essential Portfolios is well suited for investors with a TD Ameritrade account and who want a managed option.

TD Ameritrade Essential Portfolios won’t appeal to those who are looking for a very low-cost provider or access to greater diversification than stock and bond holdings in the Essentials option. Due to the higher fees, I wouldn’t be too quick to jump into this robo-advisor, as lower fee competitors are available.

The TD Ameritrade Selective portfolios charge higher fees than many competitors and their advisors might have fewer credentials than their peers at other hybrid models.

In fact, if you’re seeking a robo-advisor with human financial planners, Personal Capital has a lot going for it, (plus the free investment management dashboard that’s available whether you sign up for investment management or not).

If you’d like additional information, or if you’d like to sign up for the service, visit the TD Ameritrade Essential and Selective Portfolios website.

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

 

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