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 Spring 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

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.

Merrill says that about three in four of their 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. 

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. Clicking on the name of an ETF or fund takes you to a prospectus. You cannot make any changes to the proposed portfolio, though, and that can be frustrating given that you can actually get specific details but do nothing with the information. 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.

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.                         

The overall Merrill offering includes banking services from Bank of America, such as checking, savings, loans, and credit cards. 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.

Merrill Guided Investing compiles its portfolios using ETFs from Vanguard, Schwab, iShares, and State Street Global Advisors, as well as a mutual funds from TIAA CREF for social impact fixed income.

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 funds used for rebalancing are non-proprietary. There are 15 investment strategies available, some of which include ETFs and mutual funds for those seeking impact investing. The Merrill chief investment officer manages the strategic and tactical asset allocations in the strategies to align with the firm’s insights.

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

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.

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

There is an online chat for prospective clients, but not for existing clients. There is 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. 

Merrill Guided Investing was 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 a two-factor authentication for attaching an email address to an account. Merrill uses an SSL SHA2-256-bit hash algorithm for securing their 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.

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

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 about costs, you’re frequently prodded to consider additional guidance, at a higher cost, as your account balance increases.

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

• Merrill Guided Investing vs E*TRADE Core Portfolios