E * TRADE Core Portfolios Review 2021: Pros, Cons and Comparisons


E * TRADE is known for active traders, but loyal investors will appreciate its robo-advisor offering, the E * TRADE Core Portfolios.

Core Portfolios offer low cost ratios and specialty investment opportunities, including socially responsible ETFs and a smart beta ETF. In addition to portfolio options, clients have access to an impressive arsenal of investor tools and educational resources, including financial planning guides from investment advisors.

E * TRADE Core Portfolios is best suited for:

  • Current E * TRADE customers.

  • Cost-conscious investors.

E * TRADE Core Portfolios at a glance

Investment cost ratios

The average management fee for taxable portfolios is 0.07%. The average management fee for all portfolios is 0.08%.

Account fees (annually, transfer, closure)

$ 75 full transfer fee; $ 25 for a partial transfer.

  • The portfolio mix is ​​generally well diversified but lacks exposure to international bonds and non-market correlated assets such as real estate investment trusts (REITs) and commodities.

  • Portfolios are customizable – clients can choose socially responsible ETFs or a smart beta ETF based on their investment preferences.

Socially responsible portfolio options

Clients can invest in SRI portfolio options at no additional charge.

• Individual and joint non-pension accounts.

• Roth, traditional, rollover, and SEP IRAs.

All broker accounts are automatically entered into a tax-sensitive investment strategy.

Drift and semi-annual rebalancing.

Customers have not assigned an individual financial advisor or portfolio manager to the account. However, clients may contact representatives of investment advisors who have their Series 7 and Series 66 designations. Some employees have their CFP designations.

Bank account / money management account

E * TRADE offers a premium savings account.

Customer support options (including website transparency)

The team of investment advisors is available Monday through Friday from 8:30 a.m. to 8:30 p.m. Live customer service agents available 24/7 via phone or chat.

Where the E * TRADE Core Portfolio shines

Integration with E * TRADE brokerage accounts: The minimum amount of USD 500 applies specifically to an E * TRADE Core Portfolios account and not to an aggregated balance across all E * TRADE accounts. However, existing E * TRADE customers can use the in-house transfer tool to easily convert their accounts into core portfolios. You don’t have to sell any securities beforehand – the robo-advisor does it for you by liquidating holdings that are not in your recommended portfolio, free of commission. (You can, however, make capital gains or losses in the process.)

Customers also have access to all of E * TRADE’s extensive educational content: Investors can find out more about topics such as setting up an emergency fund and carrying out complex option transactions. The E * TRADE website also offers impressive tools and guides on retirement planning.

Investor’s risk profile: Each customer or prospect – it is admirable that the profile questionnaire is available without signing up or creating an account – is guided through a series of nine questions to assess risk tolerance. The questionnaire is one of the most thorough we have ever seen. E * TRADE asks questions from multiple angles to find out how the investor tolerates different levels of risk and market fluctuations.

After answering the questions, you can view a recommended portfolio. E * TRADE does not disclose the specific investments used, but the company shares a recommended asset allocation along with historical index returns over 15 years in a best, worst and average case scenario for context. Investors are offered two options – a recommended portfolio selection and a suitable alternative.

One of the portfolio recommendations from E * TRADE.

Strong customer service: In addition to the extensive library of tools and investor training, E * TRADE Core Portfolios customers can seek advice from a team of investment advisors Monday through Friday from 8:30 am to 8:30 pm Eastern Time. Its specialists all have the designations of the 7 and 66 series and some have their CFP designation.

They can provide guidance on building a retirement portfolio and estimate projected income and financial needs in retirement. They can also provide investment recommendations, portfolio building strategies, and advice on financial decisions such as retirement, college, and tax planning.

For general customer service, live staff are available around the clock to answer questions by phone or chat.

Portfolio Fees and Special Options: E * TRADE uses inexpensive Exchange Traded Funds (ETFs), the cost ratios of which are between 0.7% and 0.8%, depending on the portfolio.

Clients have the option to personalize the equity portion of their portfolio by swapping E * TRADE’s standard ETFs for socially responsible ETFs, thereby weeding out companies that do not conform to certain environmental and social values. There is also the option of a Smart Beta ETF. Smart beta funds take a more active investment approach aiming to outperform a benchmark rather than just mirror it.

Where E * TRADE Core Portfolios are neglected

Tax strategy: The company does not offer tax loss harvesting, a service that can lower capital gains taxes significantly. The practice with taxable accounts is to sell lost investments to offset winners’ profits. It’s widely used among robo-advisors, often free of charge, although some advisers impose an additional credit requirement before the service takes effect.

Instead, Core Portfolios automatically includes all taxable brokerage accounts in a tax-sensitive strategy with ETFs on municipal bonds that can help minimize Uncle Sam’s bite on the interest and dividends associated with those portfolios.

Website transparency: Part of our customer support review is dedicated to the ease with which our testers can find important information on the vendor’s website. For the E * TRADE Core Portfolios, we struggled to find details that we thought would be important to potential clients, including the investments used in portfolios and instructions on how to close an account.

Is the E * TRADE Core Portfolio right for you?

E * TRADE has created a solid competitor in the robo-advisor arena. While the service’s management fee is slightly higher with two other robo-advisor focal points – Prosperity and improvement each fee 0.25% – the ETFs used by E * TRADE may have lower expense ratios depending on the portfolio.

Arielle O’Shea and Tiffany Lam-Balfour contributed to this review.

Disclosure: The author did not hold any positions in any of the above securities at the original date of publication.

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