E-Trade Financial Corp (NASDAQ:ETFC) today announced that it had reduced the minimum amount required for a customer to access its robo-advisor services. The previous amount of $5,000 has been lowered to $500 in an effort to attract more customers.
The robo-advisory services allow investors to benefit from professionally managed portfolios (its Core Portfolios product) at a fraction of the commissions charged by traditional investment accounts and at an affordable account minimum of just $500.
The Core Portfolios product charges a 0.30% annual advisory fee as opposed to the 2% minimum management fee charged by most advisors, which makes the account very attractive to individuals with low incomes and minimal savings.
Given that recent surveys indicate that a significant percentage of American households cannot afford to cater for a $400 emergency with cash, the recent move by E-Trade targets such households that still have a desire to invest.
The company remains at the forefront of innovation given that most millennials do not have a lot of funds to invest but have a long time to do so as they have decades of work ahead, but they may prefer to start investing now.