TD Ameritrade Essential Portfolios Review: Socially Aware Investing

TD Ameritrade Essential Portfolios is among the best robo-advisors for account types, portfolio selection, and customer service. While it's management fee and account minimums are on the higher end, compared to competitors, the robo-advisors makes up for this with features such as low-cost ETFs and advanced offerings, such as tax-loss harvesting. But is this robo-advisor right for you? Find out in our comprehensive TD Ameritrade Essential Portfolios review.

This robo-advisor is a good fit for: Hands-off investors that want access to a diverse set of portfolio options and account types.

Top perks

Excellent portfolio selection

TD Ameritrade Essential Portfolios offers one of the most extensive selections of portfolio options among the best robo-advisors. Investors can choose from five Socially Aware Portfolios which focus on environmentally and socially friendly companies, as well as a number of core portfolio options.

Tax-loss harvesting

This is one of the biggest differentiators of TD Ameritrade Essential Portfolios. Few other robo-advisors offer free and automatic tax-loss harvesting, and those that do generally only offer it for large accounts. Schwab Intelligent Portfolios, for instance, offers tax-loss harvesting to clients with $50,000 or more of invested assets. This can save investors hundreds of dollars in taxes.

Large branch network

If you'd rather get customer service help in person than over the phone or through email, TD Ameritrade has more than 275 branches across the United States. Few other brokers can match this physical presence. However, it's worth noting that TD Ameritrade had closed all of its branches temporarily due to the COVID-19 pandemic, but some are reopening on a local basis. 

Low-cost ETFs

While TD Ameritrade's management fee isn't the lowest we've found, the low-cost ETFs it uses to construct client portfolios helps make up for it. ETFs in the core portfolios have expense ratios of just 0.06%-0.07%, and even the 0.10%-0.17% expense ratios charged for its Socially Aware Portfolios are rather cheap.

Frequent rebalancing

TD Ameritrade Essential Portfolios automatically rebalances client portfolios annually and on an as-needed basis. Some competitors only rebalance assets at predetermined intervals, such as every six months.

Customer service

You can contact TD Ameritrade by phone, email, text, and chat through Facebook and Twitter.

Many account types

Unlike many of TD Ameritrade's robo-advisor competitors, TD Ameritrade Essential Portfolios supports a long list of account types. In addition to individual and joint brokerage accounts, you can open an Essential Portfolios IRA (traditional, Roth, rollover, SEP, or SIMPLE), Coverdell ESA, trust, solo 401(k) (traditional or Roth), custodial, or business account. Virtually every type of investment account can be accommodated.

What could be improved

Management fee could be lower

TD Ameritrade Essential Portfolios charges a 0.30% annual account management fee. This means you'll pay $3 in management fees for every $1,000 you’ve invested. This isn't the highest we've seen, and TD Ameritrade offers some impressive features, but it's on the upper end of the spectrum of our favorite robo-advisors.

High minimum without future commitments

TD Ameritrade Essential Portfolios requires investors to deposit at least $5,000 to get started or $500 plus a commitment to make automatic deposits. That's on the high end of the robo-advisors we cover, and could be a turn-off for newer investors who may not have a lot of capital to commit.

Access to human advisors

Unlike some of its competitors, TD Ameritrade Essential Portfolios doesn't give clients access to human financial advisors. It does have Portfolios Specialists to answer questions about the service, but if you want advice for things like saving money to buy a house or creating a budget, you might be better off looking elsewhere.

Like most robo-advisors, TD Ameritrade Essential Portfolios asks new clients to fill out a short questionnaire to determine risk tolerance and investment goals. Based on these results, you get a recommended portfolio. You can accept the recommendations, modify your risk level, or choose a specific approach (such as the Socially Aware Portfolios).

Services offered

TD Ameritrade Essential Portfolios offers standard robo-advisor services such as automatic portfolio rebalancing and professionally designed investment portfolios. In addition, it offers a few stand-out services. For example, TD Ameritrade Essential Portfolios is one of the only robo-advisors that offers free and automatic tax-loss harvesting, and it's the only one on our best robo-advisors list to offer it to clients of all account sizes. This is a strategy by which a robo-advisor strategically sells investments that have declined in value and re-invests this capital elsewhere to offset taxable gains on other investments. If you have a larger account or are in one of the higher tax brackets, this feature alone can more than pay for TD Ameritrade's management fee.

TD Ameritrade is one of a few robo-advisors offering socially aware portfolios, but offers a wider selection than most, and uses some of the cheapest socially responsible ETFs to construct these portfolios.

Pricing and fees

When it comes to pricing, TD Ameritrade Essential Portfolios isn't the cheapest in the business, but it still delivers good value considering its features. Here's a breakdown of the cost structure:

There are two types of support clients of a robo-advisor could need -- investment advice from a human being, and help with technical issues. No access to human financial advisors is included with TD Ameritrade Essential Portfolios. TD Ameritrade offers higher-level services that include personalized financial advice from advisors, but it's not a part of the basic robo-advisor service.

On the other hand, TD Ameritrade has excellent customer service when it comes to general account help. Not only is there support by phone and email, you can obtain help via Facebook and Twitter messaging. Simply put, great customer satisfaction can't be overlooked and it's a key feature when choosing the best stock broker for your needs.

• You have at least $500 to invest, or $5,000 if you don't want to commit to recurring deposits.
• You want to invest in a socially responsible manner at a minimal cost.
• You don't need to speak with a human financial advisor.
• You are concerned by the tax implications of your investments.
• You want to open a specialized type of account, such as a solo 401(k), a trust, or an account for a business entity.