> > Merrill Edge Guided Investing Review 2023: A Low-Cost Robo Advisor

Merrill Edge Guided Investing Review 2023: A Low-Cost Robo Advisor

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Let’s face it, investing can be a time-consuming process. From staying up-to-date with market trends to rebalancing your portfolio, there’s a lot that goes into a successful investing strategy. Therefore, opting for a robo-advisor, like Merrill Edge Guided Investing, is a solid choice for many people.

But, is Merrill Edge Guided Investing right for you?

In this Merrill Edge Guided Investing review, we’ll discuss everything you need to know about the brokerage’s professionally-managed portfolios so you can find the best-investing strategy for your needs.

4.1

on Merrill Edge’s website

Quick Summary: Merrill Edge Guided Investing is a robo-advisor part of Merrill Edge, an online trading platform part of Bank of America. The robo-advisor offers excellent retirement planning tools and access to human portfolio managers.

Promotion: None

Pros:

  • Access to human advisors
  • Excellent retirement planning tools
  • Access to premium Bank of America services
  • Good educational resources
  • No proprietary ETFs

Cons:

  • No Tax-loss harvesting
  • High management fees

What Is Merrill Edge Guided Investing?

Merrill Edge (a subsidiary of Bank of America) is one of the industry’s largest and most respected online brokerages. In 2019, they launched an innovative new account type, Merrill Edge Guided Investing, which offers an easy way for anyone to invest with minimal hassle.

Merrill Edge Guided Investing is a robo-advisor that also uses human insight to craft quality portfolios. Therefore, it’s a popular option among folks that want a managed portfolio without the high fees that come with many professional financial advisory services.

What is Merrill Edge Guided Investing?
Source: Merrill Edge

See Also: 12 Best Robo-Advisors: Automate Your Investments

How Does Merrill Edge Guided Investing Work?

Investing with Merrill Edge Guided Investing is a straight-forward process. Here’s a quick look at how it all works:

Investing Account Types

With Merrill Edge Guided Investing, you have access to several different account types. While the specific account type that you choose will depend on your financial goals, some of the options available to you include:

  • Individual and joint brokerage (taxable)
  • Traditional IRAs
  • Roth IRAs
  • SEP-IRAs
  • SIMPLE IRAs
  • Rollover IRAs
  • UGMA and UTMA custodial accounts

Opening an Account

Once you decide which type of investing account is right for your needs, it’s time to open an account.

To open your account, you’ll go to Merrill Edge Guided Investing’s website and complete an online application. However, it’s worth noting that accounts are currently only available for US residents.

During the application process, you’ll answer a few questions about your risk tolerance and financial goals. After you enter this information, the brokerage will create your personalized investing strategy.

You’ll then review this recommended investing strategy to ensure it’s right for you. If so, you’ll accept the recommendation, fund your account, and then sit back as your portfolio is managed on your behalf.

Merrill Edge Guided Investing Features

With Merrill Edge Guided Investing, you get a feature-packed managed portfolio. These are some of the features that you can look forward to with an account:

Minimum Investment$5,000 (Guided Investing) and $20,000 (Guided Investing with Advisor)
Fees0.45% (Guided Investing) and 0.85% (Guided Investing with Advisor)
Investment TypesMix of well-diversified portfolios comprised of low-cost index-based mutual funds and ETFs
Account TypesIndividual Taxable, Joint Taxable, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, SIMPLE IRA and Custodial
Assets Under ManagementOver $200 billion
AdviceHuman Assisted
PromotionNone
Socially Responsible Investingyes
Portfolio Rebalancingyes
Tax-Loss HarvestingNo
SupportLive Chat, Phone and Email

Guided Investing

When you open a managed portfolio account with Merrill Edge, you’ll need to decide which type of portfolio management system is right for you.

The first option, Guided Investing, is essentially Merrill Edge’s DIY robo-advisor account. With this account, you’ll need a starting balance of at least $5,000. These accounts come with an online dashboard where you can set goals and assess your portfolio’s investing strategy.

However, unlike the second account management option (Guided Investing with an Advisor), the stand-alone Guide Investing service doesn’t include direct access to a financial advisor. So, this option is best for folks who are more comfortable with using online tools but that would like a managed portfolio that’s aligned with their financial goals.

Guided Investing with an Advisor

Merril Edge’s Guided Investing with an Advisor accounts come with all the great features that you get with a stand-alone Guided Investing account.

The difference is that this account type comes with unlimited access to an experienced financial advisor who provides one-on-one advice and helps you establish your goals.

This account type comes with a higher initial deposit of $20,000 and higher fees than the non-advisor service. But, it can be a great choice for people who want someone by their side throughout every step of the investing process.

Portfolio Creation & Asset Allocation

Once you open an account with Merrill Edge Guided Investing, you’ll be asked to answer questions about your risk tolerance and financial goals.

Doing so helps Merrill Edge create a portfolio that aligns with your needs. Most Merrill Edge Guided Investing portfolios invest in ETFs and mutual funds, which are generally from Vanguard, iShares, State Street Global Advisors, and Charles Schwab.

It’s worth noting that Merrill Edge does not manage its own ETFs and mutual funds. So, there is no explicit conflict of interest here between the brokerage and the funds it suggests for its managed portfolio clients.

When you open your account, you’ll get a chance to review your proposed portfolio allocation which is created for you by the investment pros at Merrill’s Chief Investment Officer (CIO). The professionals at the CIO will then oversee your investment strategy, though you won’t have direct contact with them unless you opt for the Guided Investing with an Advisor program.

The portfolio that the CIO creates for you will fall into one of the five broad categories. Each of these categories is designed to allocate your funds to certain types of investment products (e.g., stocks and bonds) based on your stated goals.

As a rough estimate, you can expect your portfolio asset allocation to be one of the following:

  • Conservative — less than 15% stocks
  • Moderately conservative  — 40% stocks and 60% bonds
  • Moderate  — 60% stocks and 40% bonds
  • Moderately aggressive  — 80% stocks and 20% bonds
  • Aggressive  — 90 to 100% invested in stocks

The exact percentage of funds allocated to funds that invest in stocks, bonds, and other investment products will depend on your unique situation. But, you can expect your portfolio allocation to be similar to what you see above.

Socially Responsible Investing

One of the unique aspects of Merrill Edge is that they allow account holders with managed portfolios to opt into socially responsible investing (SRI).

SRI is essentially a type of investing where you only throw your weight behind companies with robust environmental and social practices. This could mean investing in companies that are in the renewable energy industry. It could also mean avoiding investments into companies with not-so-nice track records on human rights.

With Merrill Edge Guided Investing, your can align your portfolio with your values.

Merrill Edge Guided Investing Planning Goals
Source: Merrill Edge

See Also: 7 Best Micro-Investing Apps

Portfolio Rebalancing

As Merrill Edge Guided Investing is a robo-advisory service, you won’t have to worry about changes in your account’s asset allocation. That’s because your account comes with portfolio rebalancing to help ensure that your investments stay on track.

However, unlike some robo-advisors, this process is not automatic with Merrill Edge Guided Investing.

That’s because the investment strategists at Merrill Edge will rebalance your account as needed based on their assessment of market trends. Depending on market conditions, this could happen weekly or monthly, or it might happen quarterly if everything is going according to plan.

Access to Banking Services

Since Merrill Edge is a subsidiary of Bank of America, a Guided Investing account provides you with a direct link to banking services. 

While you’ll have to apply for and open Bank of America accounts and loans separately, your Merrill Edge Guided Investing account makes it easy to get started. 

Furthermore, you can access your Merrill Edge and Bank of America accounts all through a linked platform. Thus, you can also easily transfer funds between your investing and banking accounts.

Access to Self-Directed Investing

While this article is about Merrill Edge’s managed portfolios, it’s worth noting that they also offer self-directed investing accounts. This means that your Guided Investing account provides you with access to self-directed brokerage accounts where you have full control over what you invest in. Read our full Merrill Edge review to learn more.

Although self-directed investing isn’t for everyone, if you’re looking to set out on your own and learn more about managing a portfolio, it’s easy to get started with your Merrill Edge account.

Merrill Edge Guided Investing Goal Tracking
Source: Merrill Edge

See Also: 12 Best IRA Accounts

Merrill Edge Guided Investing Pricing & Fees

The pricing and fee structure of your Merrill Edge Guided Investing account will depend on whether or not you opt for an account with access to a financial advisor. Here’s what you need to know:

Guided Investing

For a Guided Investing account with Merrill Edge, you’ll need to have an opening minimum balance of at least $5,000. These accounts have a 0.45% annual fee, which is somewhat high since you don’t get access to a financial advisor.

However, this management fee can vary from 0.40% to 0.30% based on your Merrill Edge Preferred Rewards status. Your Preferred Rewards status is based on your combined balances in Merrill investment and/or Bank of America accounts with discounts starting at balances of $20,000 or more.

Guided Investing with an Advisor

Alternatively, if you opt for a Guided Investing account with an advisor, your account will have a $20,000 minimum balance requirement. Investing with an advisor also incurs a 0.85% annual fee.

Just like with the non-advisor-based accounts, this account type also allows for a management fee discount based on your Merrill Edge Preferred Rewards status. With this discount, your annual fee can vary from 0.80% to 0.70%.

Other Account Fees

In addition to minimum account balances and annual management fees, Merrill Edge Guided Investing accounts also come with a small number of other account fees.

These fees include charges for wire transfers and closing your account, though such fees are common throughout the industry. 

It’s also worth noting that sales of ETFs within a Guided Investing account incur a transaction fee of $0.01 to $0.03 per $1,000 sold. This transaction fee is relatively small, though it’s not something you’d find with most managed portfolios or robo-advisors.

Merrill Edge Guided Investing Socially Responsible Investing
Source: Merrill Edge

See Also: 12 Best Investment Apps: For Beginners & Pros

Merrill Edge Guided Investing Security

If you’re going to trust your money to a brokerage, you’ll want to know that your assets will be kept safe and secure. 

Merrill Edge provides its account holders with high-end security. This includes encryption on all accounts, multi-factor authentication, and continuous fraud monitoring services.

Furthermore, while it is possible to lose money while investing, Merrill Edge is a member of the SIPC. So, your assets are protected up to $500,000 ($250,000 cash) in the event of a brokerage failure. 

Merrill Edge Guided Investing Pros

  • Access to socially responsible investing
  • Wide array of account types available
  • Uses both computer-driven and human-powered financial analysis
  • Potential for reduced management fees with higher account balances
  • Most ETFs are relatively low-cost
  • 24/7 customer service and support
  • Easy access to Bank of America banking and financial services
  • Guided Investing with an Advisor allows for unlimited professional financial advice
  • All ETFs are non-proprietary, so there’s no conflict of interest
  • Plenty of great educational tools

Merrill Edge Guided Investing Cons

  • All accounts have a minimum balance requirement
  • Sales of ETFs incur a transaction fee
  • Minimal opportunity to manually adjust your portfolio
  • No option for tax-loss harvesting
  • Accounts are not available to non-US residents

Merrill Edge Guided Investing Alternatives

While Merrill Edge Guided Investing is a great option for many investors, it’s not perfect for everyone. If the brokerage’s managed accounts don’t seem right for you, consider these two alternatives, instead:

Betterment

One of the largest robo-advisors in the United States, Betterment is an AI-powered robo-advisor for hands-off investors. 

Similar to Merrill Edge Guided Investing, Betterment offers a number of different managed portfolios through their robo-advisory service. However, Betterment offers a number of features that you can’t get with Merrill Edge, such as tax-loss harvesting.

Additionally, Betterment has lower annual fees (0.25% to 0.40%), no investment minimums, and the ability to speak with a financial planner if you opt for a premium account. So, it might be better for folks who are looking to start investing with a smaller amount of capital.

Read our full Betterment review to learn more.

SoFi Automated Investing

SoFi Automated Investing is a relatively new robo-advisory service that’s targeted toward folks who want to keep their expenses at an absolute minimum.

SoFi’s portfolios are created and managed by their robo-advisors, but you’ll also have access to human financial advisors whenever you have a question or concern. But, SoFi doesn’t offer socially responsible investing or tax-loss harvesting.

Nevertheless, SoFi has a clear advantage over some of the competition because it has no account management fees nor any account minimums. That being said, it invests in a much smaller selection of ETFs, many of which are relatively new funds from SoFi itself.

Thus, SoFi Automated Investing is a nice choice for investors that want to avoid advisory fees but that aren’t picky about which funds they invest in.

Read our full SoFi Automated Investing review to learn more.

Minimum Investment

$5,000

Fees

0.45%

Promotions

None

Advice

Human assisted

Tax-Loss Harvesting

No

Fractional Shares

yes

Portfolio Rebalancing

yes

Assets Under Management

$200 billion+

Minimum Investment

$0

Fees

0.00%

Promotions

None

Advice

Human assisted

Tax-Loss Harvesting

No

Fractional Shares

yes

Portfolio Rebalancing

yes

Assets Under Management

Unknown

Minimum Investment

$0

Fees

Digital — 0.25%/yr and Premium — 0.40%/yr

Promotions

1 year managed for free

Advice

Human assisted

Tax-Loss Harvesting

yes

Fractional Shares

yes

Portfolio Rebalancing

yes

Assets Under Management

$22 billion

Who Is Merrill Edge Guided Investing Best For

Merrill Edge Guided Investing is a good choice for someone who prefers to take a hands-off approach to their financial life. 

Due to its easy-to-use platform, it’s a solid option for folks that want to stay up-to-date on their finances but don’t want to actively manage their investments. Merrill Edge Guided Investing is also a nice choice if you want guidance from a financial advisor.

However, since Guided Investing has relatively high account minimums and management fees, it’s not ideal for folks with smaller amounts of capital. At the same time, it doesn’t provide you with many opportunities to customize your investments beyond opting into a socially responsible portfolio.

Ultimately, Merrill Edge Guided Investing is best for passive investors with a modest amount of capital who want a portfolio that’s completely managed on their behalf.

Merrill Edge Guided Investing FAQ

Here are our answers to some of your most common questions about Merrill Edge Guided Investing:

Is Merrill Edge Guided Investing Good for Beginners?

Due to Merrill Edge Guided Investing’s high account minimums, it’s not great for beginner investors that have access to smaller amounts of capital. However, if you can meet the account minimums ($5,000 to $20,000), Merrill Edge’s advisory service is a simple and convenient way to get started as a new investor.

In A Nutshell

  • Account Minimum: $5,000
  • Fees:0.45% (Guided Investing) and or 0.85% (Guided Investing with Advisor)
  • Promotion: None at this time

on Merrill Edge’s website

Final Thoughts

Merrill Edge Guided Investing offers individual investors an easy way to manage their money. That being said, the brokerage’s high minimum investments might not be ideal for folks who are looking to get started with smaller amounts of capital.

However, with their streamlined asset allocation process, intuitive platform, and opportunities for socially responsible investing, there’s a lot to love about Merrill Edge Guided Investing.

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