TD Automated Investing Review

Pros and Cons of TD Automated Investing

Types of Clients

TD Automated Investing serves any retail client that can fit its account requirements. These comprise an account minimum and details about you that you must meet to qualify. Below is what you’ll need to enroll, according to the firm’s Form ADV, Part 2A Appendix 1 Wrap Fee Program Brochure:

• Invest through a taxable account, traditional or Roth IRA, or a Joint Tenants with Rights of Survivorship account
• Be at least 18 years of age
• Be a citizen or a lawful resident of the United States
• Initially deposit a minimum amount of $1,000 (minimum of $900 afterward), or $25,000 for Automated Investing Plus (minimum of $15,000 afterward)
• Only fund account with cash

How TD Automated Investing Works

TD Automated Investing provides discretionary investment management via its platform and robo-advisor tools. The firm’s services split into two tiers – Automated Investing and Automated Investing Plus. The latter gives you extra benefits if you invest at least $25,000 upfront. Below is a breakdown of what services you can expect from each tier:

Automated Investing

After you sign up, you will provide information about your overall investment goal, as well as your risk tolerance and time horizon. TD Ameritrade’s robo-advisor will then use this information to recommend a pre-set portfolio containing low-cost exchange-traded funds (ETFs). Over time, the automated manager will review your portfolio’s performance and rebalance as needed.

During the initial signup process, as mentioned, you’ll need to specify a goal for your money, categorized by one of three choices: growth, retirement, and a major purchase. The firm’s Form ADV specifies that if you’re signing up with an IRA, it will default to retirement as the goal for the account.

Essentially, instead of needing to determine an asset allocation strategy that works for you, TD Automated Investing does the heavy lifting for you. This includes, as mentioned, selecting a variety of low-cost ETFs that match your investment profile. Based on the details about you, you can expect to match with one of the following approaches:

• All Fixed Income
• Conservative
• Moderately Conservative
• Moderate
• Moderately Aggressive
• Aggressive
• Aggressive Growth

To give you an idea of what one of the above would include, consider the conservative option. Based on information from TD Ameritrade’s website, an example may look like:

• 78% taxable bond
• 14% U.S. equity
• 6% international equity
• 2% cash

Keep in mind that the above is purely an example and that it may change depending on your goals, risk tolerance, and time horizon.

Automated Investing Plus

With Automated Investing Plus, you can expect the same services offered in the previous tier; however, clients at this level may also receive assistance from the firm’s wealth services team and a team of personal financial advisors. These professionals can help guide you as you build your portfolio and answer any questions. They can also work with you to build a comprehensive client profile, which includes outside assets, and a corresponding financial plan.

Fee Structure and Cost

TD Automated Investing charges you a wrap fee to participate in its program. This is where a firm charges you for investment management, advisory, and brokerage costs all with one fee. In the case of this service, you’ll pay a percentage of assets under management (AUM) annually. These are the fees associated with each program tier:

Tier	Annual Fee
Automated Investing	0.30% or $15 minimum for clients with between $1,000 and $5,000
Automated Investing Plus	0.60% or $250 minimum

You will also be responsible for paying costs related to securities you buy, such as ETFs and mutual funds. These are due to administrative and fund management expenses that each shareholder must cover.

Investment Philosophy

It can be hard to entrust a computer to manage your investments. However, TD Automated Investing adheres to a strict protocol in how it selects securities and rebalances your portfolio. Additionally, TD Ameritrade’s parent company, Charles Schwab, is registered with the SEC as an investment advisor, which requires it (including its software) to act as a fiduciary at all times.

First, it’s important to understand that when you open an account, the robo-advisor will only build your portfolio based on your goals, risk tolerance, and time horizon. These details will dictate how conservative or aggressive an asset allocation you’ll take. To select securities and rebalance your portfolio, the tool uses a combination of quantitative and qualitative reasoning.

Disclosures 

Before its acquisition by and subsequent merger with Charles Schwab, TD Ameritrade, Inc. was a registered investment advisor (RIA) with the U.S. Securities and Exchange Commission (SEC) and a broker-dealer with the Financial Industry Regulatory Authority (FINRA). Its previous registration with these agencies mandates it to disclose all disciplinary history to the public.

According to FINRA’s BrokerCheck, TD Ameritrade had 212 total disclosures before it was acquired. 72 of these were regulatory events, 139 of them were arbitrations, and one was a civil event. Charles Schwab, the company’s current parent and future provider of advisory services for TD Ameritrade clients, has 298 disclosures. 

Customer Service 

The quickest way to reach TD Ameritrade’s customer service is by visiting the contact page on its website. It provides several phone numbers for various purposes, including inquiries about new accounts, support for existing clients, and retirement plan questions.

How to Start an Account

You can open a TD Automated Investing account by visiting the company’s website and clicking “Get Started.” Then, you’ll be prompted to select one of the following goals (the one you choose will dictate how the robo-advisor invests your funds):

• Growth
• Plan for retirement
• Save for a major purchase

Next, you’ll need to set a target year for when you want to reach your goal. This helps determine how aggressive or conservative an approach you’ll end up taking. Additionally, you’ll need to specify how much money you’d like to initially contribute, as well as monthly amounts. Finally, you’ll need to indicate your appetite for risk, from low to high.

How to Make a Withdrawal

At any point, you can request to withdraw funds from your account. You can do so through the firm’s website or by calling (833) 981-8324 (IRA accounts must call). It can take up to two to four business days for the withdrawal to go through, depending on market conditions.

Also, be aware that if you attempt to take money out and it takes your balance below your limit of either $900 for Automated Investing or $15,000 for Automated Investing Plus, your account could be closed. In this case, you also won’t be able to trade securities until you go back to or over the limit.

Methodology

This review is based on publicly available information directly from TD Ameritrade’s website and the SEC. Neither the firm nor its representatives have any say on what we’ve included on this page.

Frequently Asked Questions

Is TD Automated Investing good?

TD Automated Investing offers a well-rounded robo-advisor that suits a variety of needs and goals, from conservative to aggressive clients. However, it lacks a wide range of asset classes, as it only offers five to choose from. This may be limiting to those who want to diversify their funds even more than what’s already available.

Is TD Automated Investing a fiduciary?

TD Ameritrade is a subsidiary of Charles Schwab, which is registered with the SEC as an RIA. For this reason, it and any of its representatives must act as a fiduciary at all times.

How much money do you need for TD Automated Investing?

To open an account with TD Automated Investing, you must invest at least $1,000 or $25,000 for the platform’s upper tier.

Is TD Automated Investing safe?

When you invest your funds, understand that there’s always a risk that you may lose money, including your principal. With this in mind, each TD Ameritrade account is SPIC Insured. This coverage protects up to $149.5 million worth of securities and $2 million of cash.