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Merrill Edge Guided Investing Review 2018

February 27, 2018
Advisors, Investing
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A recent addition to the list of brokers that now offer a robo-advisor is Merrill Edge, which launched Merrill Edge Guided Investing last year. The online advisor uses a mix of exchange-traded funds like other robo-advisors but also employs a team of portfolio managers to oversee and rebalance investor portfolios. Merrill Edge Guided Investing requires a $5,000 minimum investment and charges an annual management fee of 0.45%.


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Quick facts

  • Management fee: 0.45%
  • Account minimum: $5,000
Get started on Merrill Edge's secure site
Get started on Merrill Edge's secure site

Merrill Edge Guided Investing is best for:

  • Hands-off investors
  • Human oversight
  • Current Merrill Edge customers

Merrill Edge Guided Investing at a glance

Overall
Account management fee
0.45%
Investment expense ratios
ETF expense ratios range from 0.07% to 0.12%
Portfolio
Covers 10 asset classes
Account minimum
$5,000
Account fees (annual, transfer, closing)
Sell trades are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. $49.95 full transfer-out fee.
Accounts supported
Individual taxable account; Roth, traditional and rollover IRAs
Tax strategy
N/A
Automatic rebalancing
Not automatic, but portfolios are actively managed and rebalanced as needed by Merrill Lynch investment professionals.
Customer support options
Phone support 24/7; live chat and email support. Investors can meet with a Merrill Edge advisor for account support at over 2,000 Bank of America locations, but the advisors don't offer financial planning or investment advice as part of this service.

Where Merrill Edge Guided Investing shines

Human portfolio management: Robo-advisor portfolios typically are managed by computer algorithm; that’s the “robo” part. Merrill Edge Guided Investing is built on similar technology but also integrates human oversight. Investors are matched to a recommended investment strategy, or asset allocation, based on the results of an onboarding questionnaire designed to peg their risk tolerance and goals, but portfolios are actually managed by real people at the firm.

That means rebalancing isn’t automatic, but potentially one step better. The company says the portfolios are actively managed based on market conditions, and managers take advantage of opportunities to take on more or less risk as needed. Accounts also are rebalanced, if necessary, in response to changes in target asset allocation and flows into and out of the account.

Investments: Many brokers see a double opportunity in the robo-advisor movement: They can charge a management fee for each portfolio, and use their own funds within those portfolios, also collecting the expense ratio on these funds.

But Merrill Edge doesn’t have any proprietary ETFs, nor does Merrill Lynch or parent company Bank of America, so ETFs are pulled from a variety of sources. And portfolios currently have weighted average expenses that range from 0.07% to 0.12%, depending on allocation. That’s on the low side among robo-advisors.

The service offers different portfolios based on risk tolerance, time horizon and allocation, and covers a range of about 10 asset classes.

Integration with Merrill Edge: Existing Merrill Edge clients need to open a new account through the Merrill Edge Guided Investing site, but clients with multiple accounts are able to view them all at once.

Merrill Edge Guided Investing accounts also may qualify for the company’s Preferred Rewards program, which offers firm-wide perks to clients with an eligible Bank of America checking account and three-month average combined balances of $20,000 or more in qualifying Merrill Edge and/or Merrill Lynch investment accounts or Bank of America deposit accounts. The benefits of the program increase as combined balances grow, and include auto loan interest rate discounts, bonus credit card rewards and free stock trades in applicable accounts.

Customer support: Investors with Merrill Edge Guided Investing have access to the same customer support that Merrill Edge clients receive, which is a level above the typical robo-advisor’s offering. In addition to 24/7 phone support, clients can meet with a Merrill Edge advisor at one of over 2,000 Bank of America locations across the U.S. The advisors aren’t there to offer investment advice or financial planning guidance — this isn’t a hybrid human-robo service like Vanguard Personal Advisor Services or Personal Capital — but they can answer account questions.

Where Merrill Edge Guided Investing falls short

Management fee: We’d call the 0.45% fee for Merrill Edge Guided Investing bold. It’s higher than much of the competition, both independent and broker-affiliated. With few exceptions, robo-advisor fees tend to fall below 0.40%.

That’s true even of services that incorporate human portfolio oversight, as Merrill Edge does, as well as of services that go one better: access to financial planning advice from human advisors. Vanguard Personal Advisor Services charges 0.30% and includes a team of financial advisors; Charles Schwab’s Schwab Intelligent Advisory charges 0.28% for similar access to advisors. (Charles Schwab also has a strict robo-advisor offering with no human access, Schwab Intelligent Portfolios, that is free of management fees.) The outlier is Personal Capital, which caters to high-net-worth clients and charges 0.89%.

Limited features: Merrill Edge Guided Investing doesn’t offer tax-loss harvesting, a service that comes standard from many robo-advisors on taxable accounts. It also doesn’t offer joint taxable accounts, though the company says it is working to add that option.

Is Merrill Edge Guided Investing right for you?

If you’re a Merrill Edge or Bank of America loyalist and you’ve been wanting to take a dip in the robo-advisor waters, this might be where you get started. It’s a relatively easy transition, and your account will integrate pretty seamlessly with your existing accounts. You may also qualify for the company’s Preferred Rewards offering.

Otherwise, investors are likely to get more for their money elsewhere, because many other online advisors charge lower fees, and because of the lack of tax strategy available for taxable accounts.