For millions of Americans serious investment advice has never been an option. Investment advisors have traditionally been too expensive for the average person which means many people invest in the wrong assets, or simply let money sit in low-interest savings accounts. But solid investment advice is crucial to meeting your investment goals. Today, you can get affordable advice from web-based financial advisors, known as robo advisors. In this article we review one of the more popular online advisors, the ETRADE robo advisor.
What is a robo advisor? Robo advisors are algorithms that give you investment advice based on how you respond to a set of questions. Questions cover how old you are and your family circumstances, your financial situation and why you want to invest – what your investment goals are.
Based on your answers a robo advisor will present you with a range of investment options that give you the right combination of growth and risk.
While some investors (for example single, young people) may tolerate higher risk to get higher returns, other investors (if you’re retired, say) will be more risk-averse. Just like a real financial advisor a robo advisor considers your circumstances and advises accordingly.
ETRADE introduced its robo advisor in 2016, originally calling it ETRADE Adaptive Portfolios. It’s been rebranded as ETRADE Core Portfolios and offers a solid range of investment products backed by a rigorous investment advice service.
Core Portfolios offers a large mix of investment vehicles ranging from cash to exchange traded funds and socially responsible investments. You can’t quibble with the choices on offer which is to be expected given ETRADE is one of the oldest and most trusted online brokers.
Costs are an important factor when paying for investment advice, and ETRADE is not the cheapest option – nor is it the most expensive. The overall account management fee is 0.3% of your portfolio. Note that you need to maintain a minimum investment of $5,000 to invest with Core Portfolios.
Android users generally like the app, rating it 3.9 / 5 with users enjoying the overall ease of use and functionality, including one user that said “It’s pretty good. Easy to execute buy and sell options. A lot of learning and training materials to help you learn”. However, some users complained about bugs after a May 2018 update.
ETRADE’s iOS app is clearly much loved, scoring a whopping 4.7 / 5. Reviewers said they like the sophisticated trading features, including plenty of ways to chart stocks. Other users complain about difficult to use app features, with one user saying “I must tell you there’s got to be a more simple way and faster execution process”.
Robo advice has been around for a while and ETRADE is by no means the only robo advisor you can choose from. Let’s take a look at some of your other options:
Betterment. Don’t like the $5,000 account minimum imposed by ETRADE? Check out Betterment, one of the most popular independent robo advisors. Fees can be lower than ETRADE, starting at 0.25% for Betterment Digital (though Betterment Premium charges 0.4%). It offers a simple and easy to use interface, based around your savings goals. Investments are automatically reviewed and adjusted once a day.
SoFi Wealth. We’ve covered So-Fi app’s borrowing options extensively, but the company also offers a robo advisor investment service. You get free management right through 2018 and only need to invest $500, making So-Fi Wealth a top deal. However SoFi Wealth does not have much of a track record, it’s a new service.
Wealthfront. Want to try a robo advisor without paying any fees? Wealthfront waives fees on the first $5,000 you invest. It offers all the usual robo advice features including automatic rebalancing but you cannot buy fractional shares with Wealthfront, which can be a concern for smaller investors.
Charles Schwab. One of the oldest investment advisors, Charles Schwab entered the robo advisor market with Schwab Intelligent Portfolios. Fees are a reasonable 0.28%, but the minimum investment of $25,0000 will disqualify many potential investors. Like many other robo advisors Schwab Intelligent Portfolios offers automatic rebalancing and a wide selection of ETFs to choose from.
TD Ameritrade. Another established provider of investment advice, TD Ameritrade’s Essential Portfolios product offers automated advice, but it is restricted to a choice of just five ETFs, whereas other robo advisors can easily offer ten or more ETFs to investors. Fees are 0.3% which is reasonable if not market leading, the investment threshold is $5,000.
The robo advisor best suited to you will depend on your existing investment knowledge, how actively you want to be involved in your investments and what your tolerance is for fees and charges. The ETRADE robo advisor is nonetheless a popular choice and we recommend that you check it out as you evaluate your robo advisor options.