Categories
Reviews

TD Ameritrade | Essential vs Selective Portfolios | Review 2021

TD Ameritrade

8

Fees

8.0/10

Account minimum

6.0/10

Ease of use

8.0/10

Beginners

9.0/10

Advanced users

9.0/10

Pros

  • Solutions for both beginners and the advanced.
  • Many options forsocially aware investors
  • Great reputation
  • Almost any account is supported

Cons

  • Account minimum
Disclosure: Please note that this article may contain affiliate links

TD Ameritrade is one of the most well-known brokers available today and their offerings just keep getting better. Today they offer two programs – the Essentials Portfolios and Selective Portfolios platform.

Both platforms have the robust TD Ameritrade name, but the similarities end there.

  • The Essentials Portfolio is your traditional robo-advisor and is great for those looking for ‘the essentials’ or the basics of a robo-advisor without getting overwhelmed.
  • The Selective Portfolio is for investors looking for a more personalized approach. They offer human insight and a bit more personalized service with a wider selection of investments available.
Essential Portfolios
Selective Portfolios
Account Minimum
$5000 (or $500 when you set up recurring deposits)
$25,000.
Management Fee
0.30%
The management fee varies from 0.55% to 0.90% depending on the portfolio.
Portfolio
Morningstar-built, small portfolios of around 8 ETFs.
Custom
Rebalancing
Tax Loss Harvesting
Fractional Shares
Human Advice
Smart Beta
Automatic Deposits
401(k) Assistance
SRI
Best for
Investors who are looking for a low cost, goal-oriented robo advisor
Advanced investors who are looking for an actively managed portfolio with professional investment advice.
Supported Accounts
Individual and joint, Roth, traditional, SEP, SIMPLE & rollover IRAs. Trusts. Solo 401(k)s & Solo Roth 401(k)s. Corporate & business accounts. UGMA/UTMA.
 Individual and joint, Roth, traditional, SEP, SIMPLE & rollover IRAs. Trusts. Solo 401(k)s & Solo Roth 401(k)s. Corporate & business accounts. UGMA/UTMA.
Summary
Ameritrade offers a fair-priced robo advisor for beginner investors without trading fees.
This selective plan is geared towards the sophisticated investors, the portfolios have more variety and you can speak to financial professionals on the phone or even in person.
Essential Portfolios
Account Minimum
$5000 (or $500 when you set up recurring deposits)
Management Fee
0.30%
Portfolio
Morningstar-built, small portfolios of around 8 ETFs.
Rebalancing
Tax Loss Harvesting
Fractional Shares
Human Advice
Smart Beta
Automatic Deposits
401(k) Assistance
SRI
Best for
Investors who are looking for a low cost, goal-oriented robo advisor
Supported Accounts
Individual and joint, Roth, traditional, SEP, SIMPLE & rollover IRAs. Trusts. Solo 401(k)s & Solo Roth 401(k)s. Corporate & business accounts. UGMA/UTMA.
Summary
Ameritrade offers a fair-priced robo advisor for beginner investors without trading fees.
Selective Portfolios
Account Minimum
$25,000.
Management Fee
The management fee varies from 0.55% to 0.90% depending on the portfolio.
Portfolio
Custom
Rebalancing
Tax Loss Harvesting
Fractional Shares
Human Advice
Smart Beta
Automatic Deposits
401(k) Assistance
SRI
Best for
Advanced investors who are looking for an actively managed portfolio with professional investment advice.
Supported Accounts
 Individual and joint, Roth, traditional, SEP, SIMPLE & rollover IRAs. Trusts. Solo 401(k)s & Solo Roth 401(k)s. Corporate & business accounts. UGMA/UTMA.
Summary
This selective plan is geared towards the sophisticated investors, the portfolios have more variety and you can speak to financial professionals on the phone or even in person.

What is TD Ameritrade?

TD Ameritrade has been in business for the last 40 years, helping investors make the most of their portfolios. Today, TD Ameritrade has more than 11 million clients and $1 trillion in assets. They average 500,000 trades a day, which makes them quite the big dog in the investment business.

How does it work?

Account opening

Essentials Portfolio – Investors need a minimum of $500 to open a TD Ameritrade account if they opt for direct deposits of at least $500 a month, otherwise, the minimum is $5,000. Like most robo-advisors, you’ll encounter a questionnaire that asks about your risk tolerance and timeline to create your portfolio. The Essentials Portfolio has 5 portfolio options for you to choose from.

Selective Portfolio – Investors need at least $25,000 to open a TD Ameritrade Selective Portfolio. The onboarding process is a bit more complex, but you can do it online or call 1-866-551-6917.

Deposit and withdrawal

Like most brokerages, you link your ‘funding’ account to your TD Ameritrade brokerage account, whether Essentials or Selective. You may set up direct deposit or transfer and contribute regularly to your brokerage account (recommended if you want the lower initial deposit requirement) or make manual deposits.

Withdrawals work in the same manner. You can request withdrawal to your linked account. If you have the cash in your portfolio, TD Ameritrade transfers it quickly. If they must settle a portion of your portfolio to meet your request, it can take up to a week to receive funds.

Interface

The interface is user-friendly, giving investors 24/7 access to their accounts. You can log in to change your goals or timelines at any time. Being able to track your investments, see your progress, and ask questions is helpful for any investor whether they use the Essential or Selective portfolio.

Trading options

TD Ameritrade offers the largest selection of account options including:

  • Individual or joint taxable account
  • Traditional retirement account
  • Roth retirement account
  • SEP IRA
  • SIMPLE IRA
  • Rollover IRA
  • Trusts
  • Solo 401(K)
  • Roth Solo 401(K)
  • Business accounts

What can you trade?

Essentials – The Essentials platform focuses on ETFs. Each portfolio is Morningstar built and includes approximately 8 ETFs. TD offers 5 portfolios including a socially responsible portfolio.

Selective – TD offers a handful of portfolios based on your timeline and goals. For example, the Core Portfolio consists of mutual funds and/or ETFs covering a wide span of investments. The Supplemental Income Portfolio places more emphasis on fixed income securities and fewer equities.

Costs

The Essentials Portfolio costs 0.3% of assets under management.

The Selective Portfolio costs vary based on the amount invested and the portfolio chosen but usually average around 0.55% – 0.9%.

Additional features

Cash account

You may have a cash balance, but TD Ameritrade doesn’t offer any type of cash management services with either service.

Human advisors

Essential Portfolio – You have access to a team of advisors who can answer your questions and help you make investment decisions.

Selective Portfolio – You get more professional insights with the Selective Portfolio. It’s a mix of technology and human advisor, giving you the best of both worlds. You may work with a financial consultant or make your own decisions based on the advice provided by the platform.

Customer service

TD Ameritrade offers customer service via email and live chat Monday – Friday 7:30 AM – 7:00 PM ET. Selective Portfolio investors may have access to phone customer service as well.

Research

TD Ameritrade offers robust research options powered by Morningstar as well as other third-party providers.

Education

TD Ameritrade offers a wide range of educational opportunities including webcasts, market news, and full-blown curriculum opportunities.

Video

TD Ameritrade Pros and Cons

PROs
Essential Portfolios are built using Morningstar recommendations - Rather than using their own funds (they don’t have any). This gives you access to greater investment opportunities without feeling pressured to buy the robo-advisor’s own funds.
CONs
High account minimums – Both portfolios require a rather high minimum deposit of $5,000 and $25,000 respectively. The only exception is if you set up an automatic deposit of at least $500, you can open an Essentials Portfolio with just $500.
Relatively low management fee – The Essentials Portfolio management fee is lower than many other ‘big names’ like Fidelity or Merrill Edge. While it’s slightly higher than Betterment or Wealthfront, TD offers more benefits.
Small number of assets in each portfolio – Most robo-advisors fill portfolios with 10 or more assets, but TD keeps it to the basics with 8 or fewer assets in each portfolio. This makes diversifying a little harder.
The option for a socially responsible portfolio – Most robo-advisors don’t have a socially responsible portfolio option. TD offers the portfolio for every investment range whether conservative, moderate growth or aggressive.
Selective Portfolio is more complicated - Even though they walk you through each step, the Selective Portfolio is a bit more complex and may take some time to get used to.
Almost any account option is available – Most robo-advisors offer a taxable or IRA account and that’s it. TD offers the largest selection for anyone in just about any financial situation including the self-employed.
-
Human insights with Selective Portfolios – If you have $25,000 to invest, you get the best of both worlds with the Selective Portfolio combining both human (professional) advice with an automated platform.
-
Monitoring and rebalancing – Both portfolio options include automatic monitoring and rebalancing. You can watch your account but you don’t have to because you know TD has your back and will reallocate your portfolio as necessary.
-
Free tax-loss harvesting – Both portfolios offer tax-loss harvesting. This means they’ll sell certain investments at a loss to offset a large capital gain. This lowers your tax liability while allowing you to enjoy the capital gains on your investments.
-
PROs
Essential Portfolios are built using Morningstar recommendations - Rather than using their own funds (they don’t have any). This gives you access to greater investment opportunities without feeling pressured to buy the robo-advisor’s own funds.
Relatively low management fee – The Essentials Portfolio management fee is lower than many other ‘big names’ like Fidelity or Merrill Edge. While it’s slightly higher than Betterment or Wealthfront, TD offers more benefits.
The option for a socially responsible portfolio – Most robo-advisors don’t have a socially responsible portfolio option. TD offers the portfolio for every investment range whether conservative, moderate growth or aggressive.
Almost any account option is available – Most robo-advisors offer a taxable or IRA account and that’s it. TD offers the largest selection for anyone in just about any financial situation including the self-employed.
Human insights with Selective Portfolios – If you have $25,000 to invest, you get the best of both worlds with the Selective Portfolio combining both human (professional) advice with an automated platform.
Monitoring and rebalancing – Both portfolio options include automatic monitoring and rebalancing. You can watch your account but you don’t have to because you know TD has your back and will reallocate your portfolio as necessary.
Free tax-loss harvesting – Both portfolios offer tax-loss harvesting. This means they’ll sell certain investments at a loss to offset a large capital gain. This lowers your tax liability while allowing you to enjoy the capital gains on your investments.
CONs
High account minimums – Both portfolios require a rather high minimum deposit of $5,000 and $25,000 respectively. The only exception is if you set up an automatic deposit of at least $500, you can open an Essentials Portfolio with just $500.
Small number of assets in each portfolio – Most robo-advisors fill portfolios with 10 or more assets, but TD keeps it to the basics with 8 or fewer assets in each portfolio. This makes diversifying a little harder.
Selective Portfolio is more complicated - Even though they walk you through each step, the Selective Portfolio is a bit more complex and may take some time to get used to.
-
-
-
-

FAQ

Is TD Ameritrade good for beginners?

Beginners should start with TD Ameritrade’s Essentials Portfolio. As the name suggests, they stick to the essentials. They don’t confuse you with a crazy number of investments or choices. With 5 portfolios to choose from and only 8 assets in each, it’s easy to get the hang of investing, while TD Ameritrade does the heavy lifting. Check out all the best robos for beginners in this post.

What are TD Ameritrade’s ETF expense ratios?

All ETFs have expense ratios. This money doesn’t go to TD Ameritrade, though. The 0.3% of assets under management or (0.5 – 0.99% for Selective) are the only fees TD Ameritrade collects. If you trade ETFs, expect to pay 0.06 – 0.07% for regular portfolios and 0.10 – 0.17% for socially responsible portfolios.

How often does TD Ameritrade rebalance accounts?

All TD Ameritrade accounts are rebalanced annually, but they also rebalance on an as-needed basis. If you make deposits or withdrawals, for example, they’ll need to rebalance. They also rebalance when the market takes a turn (for better or worse).

Is onboarding difficult?

TD Ameritrade makes onboarding easy for both Essential and Selective portfolios. After answering the questions, they recommend a portfolio. You are free to go through the various options, though, choosing the one you think is right for you. It’s usually best to stick with TD’s choice, though.

How much money can tax-loss harvesting save?

TD Ameritrade offers free tax-loss harvesting, which is a huge benefit. They say they can save investors up to $3,000 in tax liability by using this practice when you sell off an asset with high capital gains.

How many socially responsible portfolios does TD Ameritrade have?

TD Ameritrade has an impressive 5 portfolios to choose from if you are socially-minded. You can choose the portfolio that aligns with your beliefs so your investments and beliefs align.

How are Selective Portfolio investment fees calculated?

Unlike the Essentials Portfolio, the Selective Portfolio’s management fees depend on the amount invested and chosen portfolio. Investors know the fees before choosing an investment.

How does TD Ameritrade make money?

TD Ameritrade makes money on the fees they charge for each portfolio. They don’t charge commissions for the trades, and any fees you pay for ETF or mutual fund management goes to the fund manager, not TD Ameritrade.

Alternatives

TD Ameritrade vs Interactive Brokers

Interactive Brokers is good for active and passive investors looking for a larger investment selection. Investors may trade stocks, bonds, and ETFs like most robo-advisors.

You may also trade options, futures, forex, and metals, though. IB offers 4,300 no-load fee mutual funds, but their platform is a bit harder to navigate compared to TD Ameritrade. IB charges a flat fee, versus a percentage of assets under management.

TD Ameritrade vs Webull

Webull, like most robo-advisors offers commission-free trades. Webull targets technical investors though.

If you’re into technical research and want to know the ins and outs of each investment, Webull is your platform. Webull offers extensive research and educational opportunities and offers margin trading and after-hours trading.

TD Ameritrade vs Etoro

Etoro is for the advanced investor looking for different investment options, especially cryptocurrency. Etoro doesn’t have an account minimum and has zero commissions. Etoro is also for the social investor – one who likes to know what other investors are doing and will copy or mimic their investments. If cryptocurrencies were something you were interested in, Etoro is the right platform.

TD Ameritrade vs RobinHood

Robinhood was the first robo-advisor to offer commission-free trades, but many have quickly followed suit. Robinhood trades all assets including stocks, ETFs, options, and cryptocurrency.

It is a basic platform, which is great for beginners. Since you don’t need an account minimum, anyone can start investing, getting a feel for how it works even with a minimal deposit.

Current Promotions

Account minimum of only $500 when setting up recurring deposits (essential portfolios)

Worth It or a Scam?

TD Ameritrade is as legitimate as they come. It’s a household name and with its two robo-advisor offerings, there is something for everyone.

Whether you’re a beginner and want a simple portfolio with 8 or fewer assets that are easy to manage or an experienced investor looking for a more robust experience, possibly managing your investments on your own, there’s something for you.

Summary

If you’re looking for a reputable robo-advisor with simple options and yet robust educational and research opportunities, TD Ameritrade is a great option.

You’ll get the best of all worlds, low fees, exceptional investments, and the guidance you desire whether complete hand-holding or a bit of DIY with guidance.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

Leave a Reply

Your email address will not be published. Required fields are marked *