TradeKing Advisors Review: A good investment?


Adam Cecil

Adam Cecil

Former Staff Writer

Adam Cecil is a former staff writer for Policygenius, a digital insurance brokerage trying to make sense of insurance for consumers. He is a podcast producer, writer, and video maker based in Brooklyn, NY.

Published November 11, 2015|8 min read

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You’ve probably heard of at least one of the many so called "robo-advisors" out there – startups like Betterment and Wealthfront are leading the way, with older players such as Charles Schwab jumping into the game, too. At their core, they all aim to do the same thing: automate your investments to manage and grow your wealth cheaper (and better) than traditional financial services.For most people, that means that robo-advisors should be judged on one criteria: do they make investing as easy as throwing money into a savings account?In 2014, TradeKing launched their own robo-advisor, the aptly named TradeKing Advisors. TradeKing is more well known for their online trading platform, which has won accolades for their deep discounts, online education and tools, and phone support. While TradeKing’s brokerage business is entirely self-directed, TradeKing Advisors is mostly hands-off. While this may seem like a completely different direction for the company, these two products actually complement each other nicely.

What, exactly, does TradeKing Advisors do?

Like most robo-advisors, TradeKing Advisors works by analyzing how much risk you want to take and asking you when you need the money (e.g. retirement). Using this information, they build a diversified portfolio of ETFs (exchange traded funds) and ETNs (exchange traded notes).ETFs and ETNs are traded just like regular stocks, but represent a large index of stocks. You can think of it this way: buying a share of an ETF is like buying a share of a bunch of stocks at once. You don’t need to deal with individual stocks, and don’t have to worry about whether an individual company is doing poorly and how much of your portfolio that represents. While you can get ETFs that track almost everything, the ETFs and ETNs that TradeKing Advisors uses mostly track domestic stock markets.ETFs are a lot like mutual funds, except for three major differences: ETFs are cheaper to operate, their value is determined by investor demand during the day, and they’re usually more tax effective.You don’t really need to worry about that, though. The point of all of it is to say that these are passive investments – they’re meant to be held for the long term, not constantly sold and bought.TradeKing Advisors offers two different types of portfolios: Core and Momentum. Both come in five flavors, ranging from conservative to aggressive. While both are passive investment products, Momentum is more closely tied to the movement of the markets, and will fluctuate more in the short-term. Core portfolios are adjusted "when needed" (based on TradeKing’s internal criteria), while Momentum portfolios are reviewed on a monthly basis. TradeKing will automatically reinvest dividends in both types of portfolios.You need a minimum of $500 to build a Core portfolio and a minimum of $5000 to build a Momentum portfolio. You can build multiple portfolios in one account. You can also open an IRA. TradeKing Advisors supports Traditional IRAs, Roth IRAs, rollovers, and more. You can move money between portfolios. Accounts can be individually or jointly owned.TradeKing Advisors is one of the more flexible robo-advisors out there. Being able to choose between Core and Momentum and being able to hold more than one portfolio at the same time allows users to build a larger "portfolio of portfolios," if you will. One strategy, for example, could involve holding the majority of your money in a conservative Core portfolio, while placing a smaller amount in an aggressive Momentum portfolio. This gives you a taste of building your own portfolio without the risk of owning individual stocks.

How much does TradeKing Advisors cost?

For Core portfolios, TradeKing Advisors will charge $1 per month for balances below $5,000. Above that, they will charge a 0.25% annual advisory fee.For Momentum portfolios, TradeKing advisors will charge a 0.50% annual advisory fee.Each portfolio has its own advisory fee. That means if you have three Momentum portfolios, each one will be charged a separate 0.25% annual advisory fee based on their value.To compare with TradeKing Advisors’ two big startup competitors:

TradeKing Advisors’ unique features

One of the most unique things about TradeKing Advisors is that you can hook up your account with TradeKing’s brokerage platform. That means you can look at all of your robo-portfolios and your individually owned stocks on one dashboard. If you’re interested in trying your hand at owning individual stocks or you’re already a user of TradeKing’s trading platform, this is a huge advantage over TradeKing’s competitors.TradeKing Advisors also offers a feature called "Risk Assist" for their Core portfolios. Risk Assist is an optional feature that is meant to protect investors from sudden declines in the market. TradeKing will look at Risk Assist protected portfolios every day to see if they need to move assets out of equity-based ETFs and into investments that are less sensitive to market movements. To add Risk Assist to a Core portfolio, you need a minimum balance of $5,000. The annual advisory fee will also rise to 0.5%.TradeKing Advisors also offers entity accounts, such as corporate, LLC, partnership, and sole proprietorship accounts, which other robo-advisors don’t.

You can’t do everything online

You would expect that a "robo-advisor" that’s focused on making investing as easy as possible, especially for millennials, would know that you should be able to do everything online. But TradeKing Advisors forces users to call their customer support in order to perform some basic administrative actions on their accounts.Once you’ve built a portfolio, you cannot change from Core to Momentum or vice versa online. You also can’t change the risk level from aggressive to conservative or anywhere on the spectrum. You’ll need to pick up the phone and talk to a real person to make these changes. This is in stark contrast to Betterment, which allows you to change risk level and strategy on any portfolio at any time you want.You also can’t withdraw money from your portfolios without talking to a live human being on the other end. And while you can add Risk Assist to a Core portfolio online, you need to call a customer service agent to remove it.While TradeKing may argue that many of these policies are designed around protecting a user’s assets, it does make the service less convenient for users. If they don’t want to allow users to do everything themselves, they should, at the very least, allow users to send an email or text chat with a live agent online.

Who are TradeKing Advisors' competitors?

There are a lot of robo-advisors out there. While there’s plenty of room in the market for competition, you’re likely to see turmoil in the space as companies are bought or decide to merge. As TradeKing is already an established brokerage, it seems that TradeKing Advisors has a higher chance of sticking around than some younger startups.There are two startups that are definitely worth comparing with TradeKing: Betterment and Wealthfront.Betterment is very focused on the idea of making investing as easy as possible. They allow you to open multiple accounts with varying risk settings and manage them from a single dashboard, just like TradeKing Advisors. But unlike TradeKing, you can adjust these risk settings on the fly, online, at any time. Betterment also provides educational tips inside of their tools, so users understand what they’re doing and how it affects their assets.Unlike Tradeking Advisors, Betterment charges you one advisory fee for all of your portfolios. If your account balance is below $10,000, Betterment has an annual advisory fee of 0.35% (as long as you deposit at least $100 per month, otherwise it’s a flat fee of $3 per month). Betterment will match TradeKing Advisors’ Core fee of 0.25% if you have between $10,000 and $100,000. If you have over $100,000, your annual fee will be 0.15%.Wealthfront, like TradeKing Advisor’s Core portfolio, will cost you a 0.25% annual advisory fee. However, Wealthfront will manage your first $10,000 for free. If you are a first time investor, this is far and away the best deal. It allows you to dip your toes in the water of robo-advisors without losing money in fees.Wealthfront has a minimum balance requirement of $500. Betterment has no minimum balance requirement.

Read more about automatic investing:

Should you invest with TradeKing Advisors?

There are a number of reasons you may want to invest with TradeKing Advisors.If you’re already a TradeKing user and you’re interested in using a robo-advisor product, TradeKing Advisors is the obvious place to start.On the other end of the spectrum, if you are a truly hands-off investor who just wants to plop their money into an account and let it grow over time, TradeKing Advisors makes it really easy to do that. They also offer flexibility for the passive investor by offering two types of easy-to-build portfolios with varying levels of market sensitivity.TradeKing Advisors is also one of the only robo-advisor options for people looking for entity accounts, such as corporate, LLC, partnership, and sole proprietorship accounts.However, TradeKing Advisors is not the cheapest robo-advisor out there. You don’t have the same control over your portfolio as you do at competitors like Betterment. In many cases, you can’t make changes or perform transfers online. Instead, TradeKing forces you to call a customer service representative. For young people looking to invest for the first time, this may seem old-fashioned and stodgy. TradeKing Advisors also doesn’t appear to offer any advance tax-loss harvesting features.Despite these flaws, TradeKing Advisors is a good product for some investors, and should definitely be one of the top automatic investing services that you consider.