Merrill Guided Investing Review

Merrill Guided Investing fills in a spot on the investing continuum between self-directed and completely managed accounts. Assets held in Merrill Guided Investing accounts help customers qualify for rewards that include free trades and discounts on the management fee. There are two guided investing accounts available:

• Merrill Guided Investing: An all-digital service that incurs an annual fee of 0.45%
• Merrill Guided Investing with an Advisor: Launched in Spring of 2019, this account lets customers talk with a financial advisor at any time for an annual fee of 0.85% and a minimum account size of $20,000

Todd Carver, Merrill's director of online brokerage strategy, says that approximately 70% of the Guided Investing clients qualify for Preferred Rewards discounts, as do 85% of the advisor-led investing clients.

Merrill offers additional advised investing accounts for those with more assets and a greater need for assistance. This review focuses on the entry-level digital offering, Merrill Guided Investing, which is our top choice for education due to the extensive resources provided in its Investor Education Hub on the website.

New and Notable

• The annual review is a video customized to each client's goal. You can confirm or update your goal during the review.
• Merrill expanded its progress-to-goal report, which shows a spectrum of categories to help you see how you're doing.
• The enhanced education library contains videos, articles, and market insights with the goal of expanding your investing IQ and keeping you engaged.

Merrill says that about three in four Guided Investing clients are saving for retirement, so the process of defining a goal can include assets held in other financial accounts as well as an estimate of Social Security income. The Merrill Edge website has excellent life-stage planning tools that are available to Guided Investing clients. Portfolios include non-proprietary ETFs selected by the firm’s chief investment officer.

Account Setup

Getting started with Merrill Guided Investing amounts to answering a few questions and naming a goal. The process of defining your portfolio involves entering your date of birth, the goal dollar amount you’d like, and the number of years you’ll be investing for the goal. You’re also asked whether you have any accounts outside Merrill that you’re also using to attain this goal—entering the account type, a nickname, and an approximate balance. Then you’re presented with several questions to assess your attitude towards risk. Your risk tolerance—low, medium, or high—is then reflected back to you. 

There is help and additional explanation displayed on each screen, should you want to know more about a particular question. One last question asks whether you want a portion of the portfolio invested in impact-focused funds. After that, you're informed of your target asset allocation and whether you have the plan in place to attain your goal.

You can drill down into the asset classes to see lists of ETFs and mutual funds that may be used in your portfolio, though the exact share amount is not displayed until the account is funded. Clicking on the name of an ETF or fund takes you to a prospectus. Clients can provide restrictions for positions they do not want in their accounts. At this point, you’re prompted to open an account and set up funding, though you could also save what you’ve done so far and come back to it later.

Goal Setting

If you’re planning for retirement, the setup process asks about your current annual income and suggests that you save up enough to replace 85% once retired. You can tweak that goal and add in other accounts and income sources, such as a 401(k) and Social Security, to support it and make sure you’re on track. If you’re expecting a one-time cash flow, such as an inheritance or a bonus, you can build that into the plan.         

For non-retirement goals, which you can define as a large purchase or general wealth building, there is no guidance for figuring out what the target amount should be. There also is no help for defining a college savings goal either. Merrill has clearly designed this platform for retirement savings, so it is a little unfair to attack them for that focus. However, it would be nice to see some attention given to other investment goals people have in life.                         

Account Services

Automatic deposits are easy to set up, especially if you’re already banking with Bank of America. There is no margin available, nor can you take out a loan against your account, though you can use it as collateral for a personal loan from the banking side of the business.

Cash Management

The overall Merrill offering includes banking services from Bank of America, such as checking, savings, loans, and credit cards. The integration of these services, especially into the mobile app, makes it extremely simple to move cash into and out of the robo account.

Portfolio Construction

Merrill Guided Investing offers two types of portfolios.

• Core Portfolios include ETFs from Vanguard, Schwab, iShares, and State Street Global Advisors
• Impact Portfolios invest a portion in fixed-income mutual funds from TIAA CREF

There are no proprietary funds or ETFs used in portfolio building, which offers some relief from feeling as though your portfolio manager is self-dealing.

Portfolio Management

Portfolio rebalancing triggers involve assessing the capital markets regularly and addressing risks and opportunities in the market. There’s no set schedule; when markets fluctuate, rebalances happen more often. Rebalancing may also be triggered due to contributions, withdrawals, or other flows of assets into or out of the account. The Merrill chief investment officer manages the strategic and tactical asset allocations in the strategies to align with the firm’s insights.

There are several unique and useful tools built into the experience that help the client see how their portfolio is performing. Merrill simplified reviewing your contributions toward a goal, which you can see by clicking on the Contributions tab to see your year-to-date inflows. This can be a big help for those who have an IRA within Guided Investing. The interactive video, which is customized for each client, pauses at key moments to allow you to confirm or update your goals while it's running.

It is worth adding that, although rebalancing is automatic, Merrill Guided Investing doesn't do any tax-loss harvesting on the client's behalf.

User Experience

Mobile Experience

Everything on the website is built into the native iOS and Android mobile apps, including education and planning capabilities. You end up scrolling past a lot of stock photos, though. There is a mobile-optimized Guidance and Retirement Center in the native mobile apps, and the education capabilities include retirement planning, college planning, life priorities, financial education, and insights from thought leaders. Overall, it’s easy to use and has a pleasant design.

Desktop Experience

On the desktop, there are quite a few word-packed screens to get through in order to get your account up and rolling. The overall site design has been streamlined considerably so that features are easier to find.

Customer Service

There is online chat for prospective clients, but not for existing clients. There is also phone support available 24/7, though it varies widely in quality. Our research assistant who placed calls to customer support received knowledgeable assistance quickly when calling in the morning, but calls made in the evenings were answered after a long delay by an agent who was not very helpful. 

You can walk into most Bank of America branches and talk to a financial advisor, though there aren't any you can contact directly from Merrill Guided Investing. Should you move up to the more expensive Guided Investing with an Advisor offering, you have access to a Financial Solutions Advisor in one of the Bank of America financial centers or over the phone. If a client's needs get more complex, additional advisors and solutions are available through Merrill and Bank of America Private Bank.

Education & Security

Merrill Guided Investing is excellent both in terms of educational resources and security. You'll find a centralized Investor Education Hub on the website, which lets you choose a path based on your investing experience and interests. The Hub aligns financial education content by sophistication level, topic, product, and delivery type (video, tool, tutorial, etc.). The Life Stage Planning section of the website has tools for everyone from those just starting out to those who are already retired. Merrill sends out emails related to volatility alerts, plus weekly and quarterly updates.

When setting up an account, you’re prompted to define security questions very early in the process. There is also two-factor authentication for attaching an email address to an account. Merrill uses an SSL SHA2-256-bit hash algorithm for securing the website and mobile apps as well as EV (Extended Validation) certificates in place for additional server/browser security. Accounts are insured by FDIC and SIPC, while the firm carries excess SIPC insurance through Lloyd’s of London.

Commissions & Fees

The standard management fee for Merrill Guided Investing is 0.45% of assets under management, charged monthly in advance. Merrill offers a rewards level for clients with $20,000–50,000 in their banking and brokerage relationship that provides a 0.05% discount on the management fee for any advised account. Larger balances can qualify for up to 0.15% in management fee discounts, bringing the annual fee down to 0.30%, which is what most other brokerage-based robo-advisories are charging. A full list of the rewards available can be found here https://www.merrilledge.com/preferred-rewards. 

• Monthly cost to manage a $5,000 portfolio: $1.25-$1.88
• Monthly cost to manage a $25,000 portfolio: $6.25-$9.38
• Monthly cost to manage a $100,000 portfolio: $25.00-$37.50

Is Merrill Guided Investing a Good Fit for You?

If you’re already a Bank of America or Merrill Edge client and want to move some money into a managed account, Merrill Guided Investing is definitely worth considering. It may also make sense for younger investors looking to start a retirement fund with a good chance of staying ahead of the market rather than merely matching it.

However, the higher fee overshadows some of the excellent resources and the fact that Merrill Guided Investing uses non-proprietary ETFs. Moreover, the higher fee buys you basic rebalancing without the tax management that some of the cheaper robo-advisories offer. Speaking of costs, you’re frequently prodded to consider additional guidance, at a higher cost, as your account balance increases.

Compare Merrill Guided Investing

Guided Investing can be a great investment solution for those who are already customers of Bank of America. See how it compares against other robo-advisors we reviewed.

• Merrill Guided Investing vs E*TRADE Core Portfolios

Investopedia Robo-Advisor Rating Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of robo-advisors. Our 2020 reviews are the result of in-depth evaluations of over 20 robo-advisor platforms, including the user experience, goal-setting capabilities, portfolio construction, costs and fees, security, mobile experience, and customer service. You can read our full robo-advisor rating methodology for a much more in-depth explanation than the summary below.

Overall Star Rating Explained

With the individual investor in mind, we took a critical look at the services and technology provided by robo-advisors. We organized our methodology into nine categories, scoring each advisor across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

EVALUATION CATEGORIES
Review Category	Weighting	Variables
Account Setup	5%	6
Goal Setting	15%	4
Account Services	10%	8
Portfolio Construction	15%	7
Portfolio Management	20%	4
User Experience	15%	6
Customer Service	5%	5
Education & Security	5%	6
Fees	10%	5

The Review Process

To evaluate these platforms, we sent questionnaires with over 100 queries to the participating robo-advisories. Most of the companies we reviewed gave us socially-distanced video demonstrations of their platforms and services during August 2020.

From the questionnaires, the hands-on testing of the platforms, and the platform demonstrations, we scored each category and then combined the category scores into an overall rating for each robo-advisor. Each category covers the critical elements users need to thoroughly evaluate a robo-advisor.