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Updated on Wednesday, September 2, 2020
E*TRADE Core Portfolios is this popular brokerage firm’s answer for a robo-advisor. Like other robo-advisors, E*TRADE Core Portfolios uses a blend of low-cost exchange-traded funds (ETFs) to automatically diversify your portfolio that it manages for a relatively low fee.
|Accounts offered||Individual, joint, custodial, rollover IRA, traditional IRA, Roth IRA, SEP IRA|
|Access to human advisors||No|
- What is E*TRADE Core Portfolios and how does it work?
- E*TRADE Core Portfolios investment approach
- E*TRADE Core Portfolios fees
- E*TRADE Core Portfolios features and tools
- E*TRADE Core Portfolios user experience
- E*TRADE Core Portfolios safety and security
- Alternatives to E*TRADE Core Portfolios
What is E*TRADE Core Portfolios and how does it work?
Rather than DIY-ing your accounts like you had to do in the past with E*TRADE, you now can seamlessly transfer your existing E*TRADE accounts into its robo-advisor service, E*TRADE Core Portfolios. You also can open a new account under this umbrella, with available options including individual, joint and custodial brokerage accounts as well as four different types of IRAs such as Rollover IRAs, Traditional IRAs, Roth IRAs and SEP IRAs.
E*TRADE Core Portfolios doesn’t rely on any human advisors, but rather automates your investments based on pre-set portfolios made up of ETFs. While you can contact someone for technical assistance with your account, you won’t get guidance on your investing strategy beyond the automated basics the platform provides.
- Easily switch over your current E*TRADE account: If you’ve already been investing through an E*TRADE account but are no longer interested in managing it yourself, you can easily switch your account over to E*TRADE Core Portfolios. You can do this by simply transferring funds using the intra-firm transfer tool on the Move Money page in your account.
- Options to customize your portfolio: With E*TRADE Core Portfolios, you can choose to add socially responsible investing ETFs or smart beta ETFs into your mix after your portfolio is set up. This might appeal to you if you’re interested in aligning your portfolio with your personal values, or if you’d like to try to get greater returns through a more active investing strategy.
- Branch access: You have the option to go into one of E*TRADE’s 30 nationwide branches to get technical assistance with your account. While you won’t get advice on your investing strategy or portfolio, the option to get in-person help is unique, as you’re typically limited to phone calls or virtual communications with other robo-advisors.
- Slightly more expensive than competitors: E*TRADE Core Portfolios charges an annual fee of 0.30% for its services. While not excessive, it is still higher than some of its competitors. Betterment and Wealthfront, for example, charge a slightly lower annual fee of 0.25%.
- No tax-loss harvesting: Tax-loss harvesting is an investment strategy designed to help you save money on your taxes by selling a fund at a loss and buying a similar one to replace it. E*TRADE Core Portfolios is somewhat of an outlier in that it doesn’t have this feature, which is frequently offered by other robo-advisors.
- No financial planning options: While E*TRADE Core Portfolios will ask you your goals, risk tolerance and timeframe when building your portfolio, it doesn’t offer a way to track your progress toward these goals like other robo-advisors do. Wealthfront, for example, can help you create and then stick to a plan to get ready for homeownership, retirement or funding a college education.
- No access to human advisors: You choose a robo-advisor because it’s not a human, but sometimes you really do need one. If you do, you won’t be able to access help with investing-specific questions from E*TRADE Core Portfolios, unlike other robo-advisors that may allow you to communicate with human financial advisors.
E*TRADE Core Portfolios investment approach
|Tax loss harvesting|
|Socially responsible investing|
E*TRADE uses Modern Portfolio Theory to determine which ETFs are right for you based on your risk tolerance level and how much return you’d like to earn. Depending on how you answer the questions in a short five-minute questionnaire about your risk tolerance, timeline and more, E*TRADE Core Portfolios will put your funds into one of five available portfolio options:
- Conservative: 20% stocks, 79% bonds, 1% cash
- Conservative Growth: 40% stocks, 59% bonds, 1% cash
- Moderate Growth: 60% stocks, 39% bonds, 1% cash
- Growth: 80% stocks, 19% bonds, 1% cash
- Aggressive Growth: 99% stocks, 1% cash
After Core Portfolios chooses one of these five options for you, you can further customize your portfolio by choosing to substitute in either a socially responsible ETF and/or a smart beta ETF. The former allows you to invest based on your personal values, while the latter could boost your overall returns through more active management tactics (though you may also see more turnover in your portfolio).
E*TRADE also rebalances your portfolio for you on a semiannual basis and every time it drifts 10% or more from your target allocations.
One of E*TRADE Core Portfolio’s weak points is that it doesn’t address tax efficiency as well as some other robo-advisors. It does include municipal bond ETFs in all but one of its portfolios, which are taxed more favorably because you may not have to pay certain taxes on them.
Beyond that, however, Core Portfolios doesn’t offer any form of tax-loss harvesting, which sells funds at a loss and then buys similar funds to reduce your tax bill. This is relatively common for robo-advisors to implement, so if lessening your tax burden is important to you, we’d suggest considering another robo-advisor.
E*TRADE Core Portfolios fees
- Annual management fee: 0.30%
- Investment expense ratios: N/A
At an annual rate of 0.30%, E*TRADE Core Portfolio fees aren’t as high as hiring a professional human to manage your investments, which typically runs between 1% to 3% of your assets under management per year. That being said, its rate is somewhat higher in comparison to other robo-advisors, many of which charge fees of 0.25%. Some large robo-advisors don’t even charge an annual management fee.
To put that cost difference into perspective, the E*TRADE Core Portfolio cost will run you about $300 each year for every $100,000 you have invested (versus $250 per $100,000 with many other major robo-advisors).
With Core Portfolios, your fee is divided up and deducted each quarter from the cash portion of your portfolio (each of the five Core Portfolios have 1% allocated to cash).
E*TRADE Core Portfolios features and tools
Cash management account
E*TRADE also offers checking and savings accounts as well as a line of credit through E*TRADE Bank. Its savings account only earns an APY of 0.05%, however, which is much less than what the top banks and credit unions are offering.
E*TRADE Core Portfolios monitors your account on a daily basis to ensure it stays within the asset allocation that’s been determined is best suited for you based on your risk tolerance, time horizon and investing goals. The robo-advisor automatically rebalances your account on a semiannual basis, and it will also do so any time it determines your portfolio’s mix is more than 10% outside of your intended asset allocation.
E*TRADE Core Portfolios user experience
E*TRADE offers exceptional customer service. It operates 30 retail branches that you can walk into for technical help with your account. For those who are not located near a branch (or who don’t want to go into one), you can also contact customer service by phone, email, postal mail or live chat.
E*TRADE is first and foremost an investment trading company (it’s even in the name), and so its app and website are a bit more technical-focused than other robo-advisors that have slick, easier-to-use interfaces. That’s not to say it’s difficult to manage (at least for most), but it’s not as straightforward to find information as other interfaces we’ve seen.
E*TRADE Core Portfolios safety and security
- Member of SIPC and FDIC
- Two-factor authentication
- Fraud protection
Member of SIPC and FDIC
If E*TRADE ever goes under, your money is protected up to $250,000 by Federal Deposit Insurance Corp. (FDIC) insurance for bank deposit funds or up to $500,000 by the Securities Investor Protection Corporation (SIPC) for investment funds. These don’t protect your money against losses per se (that’s the risk of investing), but rather insures that if the company goes under you’ll still be able to get your account balance back.
E*TRADE uses a type of two-factor authentication that generates a secure code to verify that it’s really you signing into your account. This is one of the best security features for online accounts, according to experts.
If your money is ever stolen out of your account, E*TRADE will reimburse you.
Alternatives to E*TRADE Core Portfolios
While you might want to choose E*TRADE Core Portfolios over another robo-advisor firm is if you already have an account at E*TRADE and want to seamlessly switch it over into E*TRADE Core Portfolios, other robo-advisors offer more robust investment options in a heartier package and for a better price. Here are some competitors to consider as you weigh which robo-advisor might be the right fit for your needs.
|Account minimum||Annual fee||Accounts offered|
|E*TRADE Core Portfolios||$500||0.30%||Individual, joint, custodial, rollover IRA, traditional IRA, Roth IRA, SEP IRA|
|Betterment||$0||0.25%||Individual, joint, trust, Roth IRA, traditional IRA, SEP IRA, inherited IRAs|
|Wealthfront||$500||0.25%||Individual, joint, trust, traditional IRA, Roth IRA, SEP IRA, 401(k) rollovers|
E*TRADE Core Portfolios vs. Betterment
Betterment is considered one of the best robo-advisors listed on our site, and for good reason. Its smooth, easy-to-use interface hides a depth of investment complexity that allows even true beginners to get a handle on what’s going on, but still take advantage of advanced features of the pros.
Betterment is also relatively affordable, or at least cheaper than E*TRADE Core Portfolios (0.25% vs. 0.30%, respectively). It also provides more options, with 101 different model portfolios versus E*TRADE Core Portfolio’s five available portfolio options.
E*TRADE Core Portfolios vs. Wealthfront
Wealthfront also charges cheaper fees than E*TRADE Core Portfolios at 0.25% annually, and it has many of the same functions of both Betterment and E*TRADE Core Portfolios. It also offers a banking feature as well as a handy net worth tracker that you can use to get a more holistic picture of your financial life, all in one place. Additionally, Wealthfront offers tax-loss harvesting to all account levels and even more advanced tax-efficiency options to those with larger portfolios.
All information included in this profile is accurate as of September 1, 2020. For more information, please consult E*TRADE’s website.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.