The bottom line: Merrill Edge Guided Investing will appeal most to existing Merrill or Bank of America customers, thanks to a valuable rewards program.
Merrill Edge Guided Investing
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Pros & Cons
Human portfolio management.
No proprietary ETFs.
Access to human advisors (for a higher fee).
High management fee.
No tax-loss harvesting.
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Merrill Edge Guided Investing, an online advisor offered by broker Merrill Edge, uses a mix of exchange-traded funds like other robo-advisors and 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%. Or, for a management fee of 0.85% and a $20,000 account minimum, you can get access to a human advisor along with your Merrill Edge Guided Investing account.
Merrill Edge Guided Investing is best for:
Investors who seek human oversight for their investments.
Current Merrill or Bank of America customers.
Merrill Edge Guided Investing at a glance
$5,000, or $20,000 for human financial advisor option.
Account management fee
0.45%, or 0.85% for human financial advisor option.
Investment expense ratios
ETF expense ratios range from 0.06% to 0.09%.
Account fees (annual, transfer, closing)
$49.95 full account transfer fee.
Covers about 10 asset classes. Also offers socially responsible portfolios.
Individual, joint and custodial taxable accounts; Roth, traditional and rollover IRAs.
This service doesn't include tax-loss harvesting or other active tax-management strategies, but does offer 10 "tax aware" portfolios to clients whose situation warrants it.
Portfolios are actively managed and rebalanced as needed by investment professionals.
Human advisor option
Personalized advice from a financial advisor available for a 0.85% management fee.
Several goal-setting tools and calculators.
Bank account/cash management option
No cash management option with this service, but easy access to Bank of America accounts from website and mobile app.
Customer support options (includes website transparency)
Phone support 24/7; live chat and email support. Investors can meet with a Merrill Edge advisor for account support at 2,500 Bank of America locations, but the advisors don't offer financial planning advice as part of the basic service.
Cash bonuses for new customers, ranging from $100 for deposits of $20,000 to $49,999, to $600 for deposits of $200,000 or more.
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 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. Portfolios currently have weighted average expenses that range from 0.06% to 0.09%, depending on allocation, for their core ETF portfolios. That’s on the low side among robo-advisors. (Merrill's socially responsible portfolios have average expense ratios of 0.2% to 0.32%.)
The service selects from about 25 different portfolios based on risk tolerance, time horizon and allocation, covering a wide range of asset classes, as well as offering a handful of portfolios that focus on socially responsible investments.
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 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 a reduced management fee on Guided Investing accounts. The 0.45% fee drops to:
0.4% if your combined balance is $20,000 to $50,000;
0.35% for combined balances of $50,000 to $100,000;
0.3% for balances of $100,000 or more.
Other perks of the rewards program include auto loan interest rate discounts and bonus credit card rewards.
Customer support: Investors with Merrill Edge Guided Investing have access to the same customer support that Merrill Edge clients receive: In addition to 24/7 phone support, clients can meet with a Merrill Edge advisor at one of about 2,500 Bank of America locations across the U.S. The advisors aren’t there to offer investment advice or financial planning guidance, but they can answer general questions, such as how to fund the account and how to use the account's tools.
If you want financial advice, you'll have to pay a bit more: For a 0.85% management fee and $20,000 account minimum, you can get access to a human advisor, not unlike the hybrid human-robo services offered by Vanguard Personal Advisor Services and Personal Capital.
If you qualify for the rewards program described above, that fee drops to 0.8%, 0.75% or 0.7%, depending on your total combined balance.
Where Merrill Edge Guided Investing falls short
Management fee: We would 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, and access to financial planning advice from human advisors. While Merrill now offers access to human advisors with their higher-tier offering, other companies provide the same service at a lower cost. Vanguard Personal Advisor Services charges 0.30% and includes a team of financial advisors; Charles Schwab's Intelligent Portfolios Premium offers similar access to advisors, and while it switched to charging a flat monthly fee for management, that fee shakes out to 0.36% on a $100,000 balance and shrinks as balances rise. The outlier is Personal Capital, which caters to high-net-worth clients and charges 0.89%, just about the same as Merrill's 0.85% management fee for the robo-plus-live-advisor tier.
Limited features: Merrill Edge Guided Investing doesn’t offer tax-loss harvesting, a service that comes standard from many robo-advisors on taxable accounts.
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, which could mean a lower management fee and other perks.
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.
Arielle O'Shea also contributed to this review.