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E*TRADE Core Portfolios Review 2021 – Is it legit?

E*TRADE Core Portfolios

7.4

Fees & Costs

7.0/10

Minimum Investment

7.0/10

Ease of use

6.0/10

Account Opening

8.0/10

Beginners

9.0/10

Pros

  • User friendly
  • Change your goals at anytime
  • Low ETF expense ratios

Cons

  • No human advisors
  • No tax loss harvesting
Disclosure: Please note that this article may contain affiliate links

E*TRADE Core Portfolios is E*TRADE’s version of a robo-advisor. Known for its low expense ratios and household name, cost-conscious investors and investors looking for a hands-off experience choose E*TRADE.

E*TRADE prides itself on its low expense ratios and assortment of educational resources, helping investors meet their investment goals.

Check out this E*TRADE Core Portfolio review to see if it’s right for you.

What is E*TRADE Core Portfolios?

You’ve likely heard of E*TRADE as it’s a household name in investing. Core Portfolios is E*TRADE’s latest installment, meant for beginners and investors looking for low-cost managed portfolios.

You need just $500 to start and E*TRADE invests in low-cost ETFs that match your risk profile and goals. Core Portfolios works much like many other robo-advisors, but it has its unique quirks setting it apart from the competition. If you’re looking for a hands-off investment approach to complement your E*TRADE account or to make your first investment, keep reading to find out more.

Low expense ratios
Account Minimum
$500
Management Fee
0.30%
Portfolio
Great variety, ETF portfolio or hybrid
Rebalancing
Tax Loss Harvesting
Fractional Shares
Automatic Deposits
Smart Beta
SRI
Human Advice
Best for
Investors who are looking to invest hands-off with a low fee advisor. E*TRADE portfolios will especially make sense if you already have an account with them.
Supported Accounts
Individual, Joint, Roth, traditional SEP and rollover IRAs.
Summary
E*TRADE offers a low cost service, the management fee is nothing out of the ordinary however the expense ratios of the ETFs that are used are especially low. Unfortunately the service does not include tax loss harvesting or fractional shares.
Low expense ratios
Account Minimum
$500
Management Fee
0.30%
Portfolio
Great variety, ETF portfolio or hybrid
Rebalancing
Tax Loss Harvesting
Fractional Shares
Automatic Deposits
Smart Beta
SRI
Human Advice
Best for
Investors who are looking to invest hands-off with a low fee advisor. E*TRADE portfolios will especially make sense if you already have an account with them.
Supported Accounts
Individual, Joint, Roth, traditional SEP and rollover IRAs.
Summary
E*TRADE offers a low cost service, the management fee is nothing out of the ordinary however the expense ratios of the ETFs that are used are especially low. Unfortunately the service does not include tax loss harvesting or fractional shares.

How does it work?

Account Opening

Open an account with just $500. Core Portfolios offers individual and joint taxable accounts. You may also open custodial accounts for your children and IRAs.

Like most robo-advisors, the process starts with a questionnaire. E*TRADE’s questionnaire contains 9 questions. You’ve likely seen the questions before if you’ve used a robo-advisor, however, E*TRADE spins them with a few different angles to get a true understanding of where you stand.

After answering the questions, E*TRADE provides a recommended portfolio showing you the asset allocation (stocks vs bonds percentage) but not the exact investments they recommend, until you create the portfolio. You’ll have an idea of how they’ll invest your money, but no specific details until later down the road.

Deposit and withdrawal

E*TRADE encourages automated deposits to keep your account growing, but you can use their various other funds transfer options on the Move Money page. If you have another E*TRADE account, you may transfer funds easily with the intra-firm transfer tool.

You may also transfer existing securities rather than cash. E*TRADE performs the transfers commission-free.

You may also start withdrawals online. E*TRADE tells you how the withdrawal affects your account, including the tax liabilities should there be capital gains. The advisory then withdraws from your cash balance first and then sells investments based on your investment allocation and what affects your taxes the least. If you’ll incur tax liabilities, you should consider your options carefully.

Interface

E*TRADE has a digital dashboard on both the desktop and mobile platforms. Many clients prefer the mobile app, which allows most of the same transactions, including withdrawals. It takes minutes to open an account, transfer funds, or make changes on either platform, but you’ll get more detailed information about fees on the desktop platform.

What can you trade?

Core Portfolios trades ETFs only. They have 5 key portfolios to choose from which they present to you after you complete your risk profile.

When E*TRADE provides you with your portfolio, they also provide alternative portfolio choices. They include socially responsible ETFs and smart beta ETFs.

E*TRADE Core Portfolios trades ETFs from iShares, Vanguard, and JP Morgan. E*TRADE presents you with a recommended portfolio, but you may choose a more aggressive or more conservative portfolio based on your preferences.

Costs

E*TRADE charges 0.3 percent of assets annually under management for their part of the pie, but you’ll also pay expense ratios. Each ETF has a different ratio, but on average they charge 0.06 percent to 0.12 percent per ETF.

E*TRADE also charges a $75 fee for a full transfer out or $25 for a partial transfer out.

Additional features

  • Cash account – E*TRADE holds all cash balances in a premium savings account or money market account, paying you a competitive APY.
  • Customer service – You can reach representatives Monday – Friday 8:30 AM to 8:30 PM Eastern time via phone or 24/7 via online chat.
  • Research – Core Portfolios doesn’t have specific research options, but E*TRADE provides access to all its research and education on its main website. This includes retirement planning and financial planning tools and various research tools.
  • Education – E*TRADE sends a monthly newsletter complete with market talk pertaining to the ETFs in the portfolios. All clients have access to E*TRADE’s educational center too which includes video and written content.
  • Rebalancing – E*TRADE rebalances accounts semi-annually or whenever the cash balance exceeds 6 percent of your account balance.

Tutorial

Pros and Cons

PROs
Core Portfolios offers the best of both worlds – investments human professionals select with technology handling the account management.
CONs
No human advisors – Core Portfolios is a true robo-advisor that doesn’t offer financial advice from a human advisor
Fair assets under management fee – Core Portfolio’s management fees are along the lines of most other robo-advisors today
No tax loss harvesting - If you sell assets, there’s no guarantee that they’ll be cost-effective trades, which may mean higher tax liabilities.
User-friendly – Right from the start, E*TRADE uses simple language and provides support through every question in the profile questionnaire. They ask the questions both verbally and graphically to ensure everyone understands.
You may be charged account cancelation fees
Your risk tolerance with a series of 9 questions
Only rebalances twice a year
Change your goals at any time – Many robo-advisors don’t allow changes to your risk tolerance, but with Core Portfolio, you can change your goals based on your current situation at any time
One pot for multiple goals – Some robo-advisors create multiple ‘buckets’, one for each goal, but Core Portfolios doesn’t. All money goes into one pot, which can be convenient but also makes it hard to differentiate your progress.
Low expense ratios – ETFs can eat at your earnings if you don’t watch the expense ratios. E*TRADE sticks with low-cost ETFs to avoid that risk.
-
PROs
Core Portfolios offers the best of both worlds – investments human professionals select with technology handling the account management.
Fair assets under management fee – Core Portfolio’s management fees are along the lines of most other robo-advisors today
User-friendly – Right from the start, E*TRADE uses simple language and provides support through every question in the profile questionnaire. They ask the questions both verbally and graphically to ensure everyone understands.
Your risk tolerance with a series of 9 questions
Change your goals at any time – Many robo-advisors don’t allow changes to your risk tolerance, but with Core Portfolio, you can change your goals based on your current situation at any time
Low expense ratios – ETFs can eat at your earnings if you don’t watch the expense ratios. E*TRADE sticks with low-cost ETFs to avoid that risk.
CONs
No human advisors – Core Portfolios is a true robo-advisor that doesn’t offer financial advice from a human advisor
No tax loss harvesting - If you sell assets, there’s no guarantee that they’ll be cost-effective trades, which may mean higher tax liabilities.
You may be charged account cancelation fees
Only rebalances twice a year
One pot for multiple goals – Some robo-advisors create multiple ‘buckets’, one for each goal, but Core Portfolios doesn’t. All money goes into one pot, which can be convenient but also makes it hard to differentiate your progress.
-

FAQ

Is E*TRADE Core Portfolios secure?

E*TRADE uses high-level encryption, and all accounts have SIPC protection up to $500,000 and excess protection up to $600,000,000 with London Insurance.

Is E*TRADE Core Portfolios for beginners?

E*TRADE doesn’t offer the handholding that other robo-advisors offer. They started the program as an add-on to its already robust offerings. If you don’t have a solid understanding of how investments work, you may want to look elsewhere.

What is the cash value target?

E*TRADE aims for a 1 percent cash value. They invest the cash in an interest-bearing money market or other alternatives. While you don’t want a large cash balance as there’s an opportunity cost there, having some cash on hand is important.

Does Core Portfolios offer self-directed investments?

No, Core Portfolios is for the hands-off investor that uses the combination of human advisors and technology to create an optimized allocation. If you open a Core Portfolios account, you agree to let E*TRADE manage your account and choose the investments.

Do you need a $500 balance if you have other E*TRADE accounts?

Yes, the $500 minimum balance is irrespective of any other E*TRADE accounts. This means even if you have other E*TRADE portfolios, their balance doesn’t count toward the $500 minimum balance required for Core Portfolios.

Does Core Portfolios offer 401K assistance?

No, but you can roll over an old 401K to your E*TRADE Core Portfolio account. If you have a 401K, you can’t use Core Portfolios to manage it, I would suggest you take a look at a Robo-Avdisor called Bloom instead.

Does E*TRADE have brick-and-mortar locations?

Yes, E*TRADE has 30 locations throughout 17 states. If you live near a brick-and-mortar location, you may visit them in person to get advice and help. If you don’t, there are plenty of opportunities for support over the phone or online.

Alternatives

E*TRADE vs TD Ameritrade

If you already have a TD Ameritrade account, the TD Ameritrade Essential Portfolios robo-advisor may be attractive for you. It’s best for investors with a lot to invest (minimum is $5,000) and their fee is steep at 0.3 percent of assets under management, but they have low expense ratios which are great for investors with a lot invested.

TD Ameritrade invests across 8 asset classes and incudes socially responsible investments. You may open a taxable or retirement account and TD Ameritrade offers tax loss harvesting on all accounts.

E*TRADE vs Interactive Brokers

With just $1,000 investors can use the Interactive Advisors (Interactive Brokers’ robo-advisor). This robo-advisor is a simpler version of the complicated Interactive Brokers and is a great supplement for current Interactive Brokers investors looking for a little bit of hands-off investing.

Interactive Advisors rebalances your account quarterly and lets you see your investments and positions at any time. They create your portfolio based on your goals and risk tolerance, like most other robo-advisors, and charge between 0.08 percent and 1.5 percent in management fees.

E*TRADE vs Robinhood

Robinhood is great for investors looking for commission-free trades. They only offer taxable accounts, though, no retirement accounts. You don’t need an account minimum and the interface itself is rather bland, which works well for beginning investors or those looking for only the basics with no bells and whistles.

What sets Robinhood apart is its available investments. Most robo-advisors stick to ETFs, but Robinhood offers stocks, options, and cryptocurrency too. If you’re looking for robust customer service, you’ll want to look elsewhere, as you’ll only find it online and via email.

E*TRADE vs Fidelity Go

If you prefer a little human oversight on your account rather than just an algorithm, Fidelity Go is the way to go. You get the benefit of technology and no investments with the reassurance that humans are watching your account, reallocating it and keeping everything intact.

This doesn’t mean you’ll get access to financial advisors though – they manage your money but they don’t talk to clients. You need just $10 to invest and pay no management fees until you have at least $10,000 invested.

Current Promotions

There are currently no promotions.

Worth It or a Scam?

E*TRADE Core Portfolios is worth it for the hands-off investor with a decent understanding of investments but don’t have the time to be bothered with managing them. The fees are in line with most other robo-advisors and the investments have low expense ratios, giving you more of your earnings.

Summary

E*TRADE Core Portfolios is great for existing E*TRADE clients and new clients looking for a hands-off way to invest. They use the same methodology other robo-advisors use, assessing your risk profile and implementing the Modern Portfolio Theory.

If you’re looking for human support, you may look elsewhere as most of your contact is online and with a computer, not a person. But casual investors looking for a place to park their money do well with E*TRADE.

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