June 17, 2018

Merrill Edge Guided Investing Review

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If you thought investing with Merrill Lynch was only for the wealthy investor, you may be in for a surprise. Not only have they opened an online discount broker, they began offering a robo-advisor as well. While it's a new player, it may be worth considering.

Overall Score

4.0

Annual Fee

3.0

Minimum Deposit

3.0

Human Advisors

5.0

Customer Service

5.0
5-point scale (the higher, the better)

Pros and Cons

  • Human portfolio monitoring
  • Potential to outperform the market
  • Seamless integration for BofA or Merrill Edge clients
  • Higher fees than competitors
  • No tax loss harvesting
  • Higher minimum deposit.

Bottom Line

Higher fees, but the human portfolio management aspect gives you potential to outperform the market.

Merrill Edge Guided Investing (MEGI) offers a clean interface with a well-guided experience for the new or experienced investor. While technically called a "robo-advisor," Merrill Edge Guided Investing offers a combination of automated and personal advice to a certain degree.

Like many other robo-advisors, Merrill Edge invests your money in ETFs across a series of 11 asset classes. Where they differ, though, is in their active management of your portfolio. Where other robo-advisors try to match the market's performance, Merrill Edge aims to outperform it. They do this by providing you with a team of financial managers that not only watches but also rebalances your portfolio.

How MEGI Works

Starting with Merrill Edge Guided Investing is much like starting with many other robo-advisors. You provide your personal information and answer a series of questions. The system then determines your goals and compares it to your risk tolerance.

The Merrill Edge software then creates a portfolio that consists of low-cost ETFs. You will see ETFs from Vanguard and iShares for the most part - there aren't any Merrill Lynch funds, so they are not "double dipping" on the fees they collect from you.

Merrill Edge Guided Investing provides you with a suggested portfolio, which you can either accept or decline. You cannot personalize the portfolio, but you can change which portfolio you choose. Once you are a member, you have access to the customer support team that is comprised of investment specialists who can answer your questions regarding investments.

You can open taxable as well as retirement accounts. They offer the traditional IRA options, including Roth IRAs as well as 401(k) rollovers. You choose your goal for investing and open the appropriate account. Merrill Edge Guided Investing then manages your portfolio according to your goals, keeping the allocation more aggressive when you are in the early years of your goal and taming it back a bit once you get closer to your stated goal.

Who Is It Best For?

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Robo-advisors are typically best for the hands-off investor as well as the beginning investor. Because Merrill Lynch Guided Investing requires a $5,000 minimum opening deposit though, it may not be the best fit for many beginning investors.

We tend to think Merrill Edge Guided Investing is best for those who want a little human interaction/oversight of their account but don't want the stress of managing their portfolios themselves. Merrill Edge gives investors the best of both worlds with the automation of the robo-advisor combined with the personal attention the advisors provide.

What Are the Fees?

Merrill Edge charges an annual fee of 0.45% of assets under management. They charge you on a monthly basis, though. For example, if you have $10,000 invested, you would pay $3.75 per month. They also charge a transaction fee for each trade (an estimated $0.01 to $0.03 per $1,000).

Don't forget, you will also be responsible for any ETF expense ratios or other commissions involved with the assets you trade. These fees aren't Merrill Edge fees, but they still come out of your profits.

Current Merrill Edge and Bank of America Customers
Merrill Edge Guide Investing does make it easy for current Merrill Edge (online broker) and Bank of America customers to use the Guided Investing services. Rather than signing up for a new account, you could log into your existing account and request the Guided Investing account. Your information will be prepopulated into the system and all you have to do is answer the questions regarding your risk tolerance and goals.

Once you link your accounts, you can transfer funds back and forth between them for immediate posting. You don't have to wait the few days that it normally takes to transfer funds to and from an external account.

The Platform and App

There isn't a lot to speak of when it comes to the Merrill Edge Guided Investing platform and app. It is a clean interface, but it is also simple. You can see the status of your portfolio, increase your contributions, or change/add goals, but that's about it.

Merrill Edge Guided Investing does not have a separate app either. You can log into your Merrill Edge app and view your portfolio on the app, but that's about the extent of its capabilities.

Reasons We Like Merrill Edge Guided Investing

  • Merrill Edge Guided Investing doesn't use an algorithm like many other robo-advisors. Rather than an algorithm, you get the expertise of financial professionals deciding what to do with your portfolio. This way, things aren't seen as just "black" and "white," and they are given careful thought based on the situation at hand.

  • Merrill Edge Guided Investing aims to outperform the market rather than match its performance. There's nothing wrong with shooting high, right? Who wouldn't want to outperform the market and reap the rewards?

  • They offer automatic portfolio rebalancing. Rather than "computer rebalancing," you get human rebalancing. While your original allocation is created by the system's software, your financial advisors will oversee the progress and actively manage it as they see fit.

  • Merrill Edge Guided Investing offers several options for customer support. This is an area many robo-advisors lack what investors desire. The term "robo" means automated. You shouldn't expect human interaction, but Merrill Edge offers it 24/7. You can even meet with an advisor at one of their more than 2,000 Bank of American locations.

  • You can create a portfolio before signing up for an account. In other words, you can put all of your information in and answer the questions to see what type of portfolio they would recommend. If you don't like the results, you can either try again or walk away without spending a dime. This way, you can get a taste of what they offer without committing.

  • Merrill Edge Guided Investing uses Modern Portfolio Theory but with a twist. Initially, Merrill Edge uses the Modern Portfolio Theory as they set up your investments. Once you are a client, though, the human oversight of your account may result in making changes that don't align with Modern Portfolio Theory but are the best for your situation.

  • You can see hypothetical projections of your investments. Once you provide your risk tolerance and goals, the Merrill Edge system provides you with projections of how your portfolio will react and what value it will have at specific points. You can even change your parameters to see how they would change the forecast.

  • You can't readjust your portfolio without answering the initial questionnaire again. You might think this is a bad thing, but it helps you in the end. You can't make emotional decisions when something goes wrong. You have to go through the process of retaking the quiz and letting the software assess what should happen next. This could eliminate unnecessary trades.

  • All ETFs in the Merrill Edge portfolios are carefully screened. The Global Wealth and Investment Management Chief Investment Office carefully evaluates each option and changes it as they see fit. They are always on the lookout to make sure the ETFs meet the requirements of the chosen portfolio.

Reasons You May Want to Look Elsewhere

  • The minimum required investment is high. New investors often look towards robo-advisors to help them get their feet wet. But with a minimum investment of $5,000 required, new investors aren't likely to become a part of Merrill Edge. There are several other options that don't require a minimum investment that may be a better option.

  • The annual fee is higher than many other robo-advisors. The average robo-advisor charges 0.25% per year. This makes Merrill Edge rather costly. On the flip side, they do offer human advice, which many robo-advisors don't offer, so you may see the benefit in the higher fees.

  • The platform lacks tools to properly manage goal tracking. The entire dashboard and lack of a designated mobile app leave a lot to be desired with Mobile Edge Guided Investing. Several other robo-advisors have designated apps and many more tools that provide guidance and education to help with their investments.

How It Compares

Merrill Edge Guided Investing vs Betterment:
Betterment doesn't have a minimum investment required and they charge just 0.25% per year. They don't offer 24/7 customer service or the ability to meet with an advisor in person. But they do have a dedicated mobile app and have more tools available, including goal tracking, which Merrill Edge doesn't offer.

 

Merrill Edge Guided Investing

Betterment

 

Benefits and Features

Annual Fee
0.45%
0.25% for accounts under $100,000; 0.40% for accounts $100,000+
Minimum Deposit
$5,000
$0
Phone Support
24/7
Yes
Live Chat Support
24/7
No
Email Support
Yes
Yes
Human Advisors
Yes
Yes
Tax Loss Harvesting
No
Yes
Goal Tracker
Yes
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Fractional Shares
No
Yes
Taxable Accounts
Yes
Yes
401k Plans
Yes
Yes
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
No
Yes
529 Plans
No
No

Merrill Edge Guided Investing: Pricing information from published website as of 06/14/2018

Betterment: Pricing information from published website as of 04/04/2018

Merrill Edge Guided Investing vs Wealthfront:
Wealthfront requires a minimum $500 investment compared to Merrill Edge's $5,000. Wealthfront also charges just 0.25%. But, they don't offer online chat or 24/7 customer service. All changes made to your portfolio are also automated with Wealthfront, whereas Merrill gives you the benefit of a human advisor.

 

Merrill Edge Guided Investing

Wealthfront

 

Benefits and Features

Annual Fee
0.45%
0.25%
Minimum Deposit
$5,000
$500
Phone Support
24/7
Yes
Live Chat Support
24/7
No
Email Support
Yes
Yes
Human Advisors
Yes
No
Tax Loss Harvesting
No
Yes
Goal Tracker
Yes
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Fractional Shares
No
No
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
No
Yes
529 Plans
No
Yes

Merrill Edge Guided Investing: Pricing information from published website as of 06/14/2018

Wealthfront: Pricing information from published website as of 04/04/2018

Merrill Edge Guided Investing vs M1:
M1 offers more flexibility than your standard robo-advisor. You can customize your portfolio with stocks, bonds, and any other assets sold on the New York Stock Exchange. You are completely on your own, though, which is quite the tradeoff. Everything is done online with the exception of the customer service reps you can call for small things.

 

Merrill Edge Guided Investing

M1 Finance

 

Benefits and Features

Annual Fee
0.45%
None
Minimum Deposit
$5,000
$100
Phone Support
24/7
Yes - normal business hours
Live Chat Support
24/7
No
Email Support
Yes
Yes
Human Advisors
Yes
No
Tax Loss Harvesting
No
Offers tax-efficient investing
Goal Tracker
Yes
No
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Fractional Shares
No
Yes
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
No
Yes
529 Plans
No
No

Merrill Edge Guided Investing: Pricing information from published website as of 06/14/2018

M1 Finance: Pricing information from published website as of 06/14/2018

Bottom Line

If active management of your portfolio done by someone else is your goal, Merrill Edge Guided Investing may be a good option.

If you are looking for a traditional robo-advisor with low minimum required investments and low fees, though, you will have to look elsewhere. Consider your options and what benefits you would like to see in order to determine if paying 0.45% per year for human financial advice is worth it to you.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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