TD Ameritrade introduces new retail robo-adviser platform

Custodian offers five portfolios with investment selected by Morningstar professionals

Nov 1, 2016 @ 12:22 pm

By Grete Suarez and Liz Skinner

TD Ameritrade Holding Corp. is the latest custodian to launch a low-cost direct-to-consumer robo-advice platform to attract clients who don't want to pay more for human help with financial planning and investing.

The Omaha, Neb.-based company's Essential Portfolios is available now, though a splashier launch for the robo-adviser will occur early next year.

Aimed at the “value-conscious investor,” the online platform leads clients through an automated process of establishing goals and identifying key dates for long-range aims like college planning, wealth generation and retirement. Investors will be matched with portfolios of passive exchange-traded-funds for a flat fee of 30 basis points and a $5,000 minimum investment.

There will be five portfolio strategies with fund recommendations by Morningstar Investment Management – each consisting of five nonproprietary ETFs and cash. Amerivest will monitor and automatically rebalance the portfolios.

The intent for the robo-adviser launch is not to compete with advisers, rather to bring in new categories of clients.

“Our intent is to bring in new investors and serve them throughout their investing journey,” said Lule Demmissie, managing director of investment guidance at TD Ameritrade.

“We have found that not all investors, even those with substantial wealth, necessarily want to work with an adviser. For these investors, we need to offer solutions that better fit their needs,” she said.

TD Ameritrade joins the wave of custodians in launching their own robo-advisories. Charles Schwab introduced its retail robo-advice, Intelligent Portfolios, in March 2015 while Fidelity Investments unveiled its Fidelity Go platform in July 2016.

Lex Sokolin, global director of fintech strategy at Autonomous, believes that custodians entering the advisory space is the result of a redefinition of the entire investment management industry. Especially in robo-advice, where recent reports project between $1.5 and $2.4 trillion of assets in this channel by 2020.

“Everyone is jumping into the space, from ETF manufacturers (Blackrock, Schwab, Fidelity, Invesco) to distributors (Bank of America, UBS, LPL) to independents,” Mr. Sokolin said.

Custodians, however, will still have to work harder to move beyond offering passive portfolios.

“Tech-first robos draw focus to their features - from mobile design, to tax-loss harvesting, to data aggregation or $500 minimums,” Mr. Sokolin said. “If you look closely at the B2C robo-advisers, they are about eight years ahead in feature development over a passive portfolio selection tool like what most of the custodians have launched.”

In effort to catch up with the startups, TD Ameritrade also announced additional features including tax loss harvesting that will be introduced over the coming months, echoing features Betterment already offers. Mr. Sokolin believes over the years, startups and incumbents will look increasingly similar in their offerings.

“It is a land grab over the next few years, and the winner will have the strongest ties digitally directly to the client,” Mr. Sokolin said.

Some advisers are not worried about custodians entering their advisory space, since clients still want the human touch.

“I don't have a real issue with them entering the space. Most clients want technological advancement but also want it paired with a human element that can offer professional guidance,” said Timothy Baker, founder and principal of Wealthshape.

“The robo movement is ever evolving. As a firm that embraces technology, I believe in taking the best of what robo tech has to offer while filling the voids it leaves behind,” Mr. Baker said.


What do you think?

View comments

Upcoming event

Nov 20


Future of Financial Advice

An innovative conference dedicated to improving the client experience by enhancing digital technology, mainstreaming healthcare and optimizing wealth management strategies.The Future of Financial Advice will provide a forum for... Learn more

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

Cetera latest to be hit with data breach of personal information

Company is offering clients complimentary, two-year membership to an identity theft protection and credit monitoring service.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print