In 2010, Merrill Lynch catapulted into the 21st century. In that year, they launched the low cost internet brokerage, Merrill Edge.
Just a few months ago, they proved that traditional advisors are embracing technology as fast as the “Robo-Advisors.” In 2017, Merrill Edge launched Guided Investing. Guided investing merges the world of technology with traditional portfolio management. But does Guided Investing really offer an edge in today’s marketplace, or are they caught up in tradition? Here’s what you need to know about the Merrill Edge Platform.
Merrill Edge Overview
Merrill Edge encompasses three unique products. First, Merrill Edge is a discount brokerage house. The platform offers research tools and low cost trades.
Second, they offer “guided investing solutions.” This is a low cost portfolio management platform designed to compete with “Robo-Advisors.”
Third, they offer financial advisors who will manage your portfolio for you. This review will cover the first two products.
Merrill Edge Guided Investing
Merrill Edge Guided Investing competes with robo-advisors like Betterment and Wealthfront. Like robo-advisors, Merrill Edge relies on modern portfolio theory. They use asset allocation and low cost investments to produce returns. But, Merrill uses human forecasts to *hopefully* maximize returns.
Merrill’s will not invest Grandma’s retirement money into the $SNAP initial public offering. However, they will tilt certain asset classes based on their forecasts. They will generally choose ETFS as index funds. You can learn more about the “human component” of Merrill Guided investing here.
It’s too early to say whether Merrill’s Guided Investment portfolios will produce “alpha.” Will moving in and out of specific investments actually produce outperformance? The jury is still out.
Whether Merrill’s Guided Investment Portfolios succeed or fail, they will do so for modest fees. Merrill Edge charges a 0.45% management fee for all guided portfolios. You must invest at least $5000. The 0.45% fee doubles Betterment and Wealthfront’s 0.25% management fees. However, the 0.45% fee clocks in at less than half the management fee charged by an average human advisor.
The higher fee you pay at Merrill Edge doesn’t come with access to a financial advisor. Instead, you’ll have to contact Merrill Edge’s award winning customer support team for help. The customer support team includes investment specialists who can answer your investment questions.
Merrill Edge Guided Investing options is easiest to start if you have a Bank of America account. The platform integrates with the Bank of America platform, and it allows quick and easy money transfers.
Merrill Edge Online Investing & Trading
Merrill Edge also has a more developed low cost brokerage house. Merrill Edge is a Panacea for individual stock investors who make just a few trades a month. Active traders, on the other hand, should look elsewhere.
The Merrill Edge platform offers leading Portfolio Analysis tools. You can use these to determine if your portfolio aligns with your ideal asset allocation. The portfolio analysis can consider your individual equities, ETFs and Mutual Funds.
Merrill Edge offers Lipper Ratings and Morningstar Classifications for Mutual Funds and ETFs. They provide Merrill Lynch research and Third Party Research on individual equities and bonds. Plus, their easy to use interface shows stock market fundamentals, basic charts and information from SEC filings.
More active investors will want to check out Merrill Edge MarketPro can set up “Streaming Quotes” for all the stocks on their watchlist. Streaming quotes are just prices for a list of stocks. The data is live, but needs to be refreshed manually. MarketPro also allows users to access Recognia Chart Analysis Tools. People who subscribe to a momentum investment philosophy will be pleased to see this option built into Merrill Edge Platform.
Trades on Merrill Edge cost $19.95 for Mutual Funds, $6.95 for Equities and ETFs, and an additional $0.75 for options contracts. However, you can qualify for free trades by maintaining a minimum account balance. People with at least $50,000 in assets qualify for 30 free equities trades per month. Those with at least $100,000 qualify for 100 free trades per month. This makes Merrill Edge more enticing than low price leader Ally Invest for high balance investors.
The one area where the investing platform falls short? They don’t offer conditional orders. Merrill Edge makes it easy to set up alerts, but you can’t initiate buy/sell agreements without clicking the button in real time.
Overall Impression of Merrill Edge
The Guided Investing option could prove to be a valuable financial tools. If you believe that indexing isn’t the only solution, then you should consider the Guided Investing solution. Individual stock investors will love Merrill Edge’s research and tools platforms (along with the low fees). It’s not great for day traders, but it’s an amazing solution for occasional stock buyers with a high balance in their account.
Merrill Edge
Pros
- We like the human aspect of it
- Great research tools
Cons
- Higher prices than other robo advisors
- Lacks key features for some investors
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