Merrill Guided Investing review 2021

Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.

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Merrill Guided Investing Logo

Best For

  • Bank of America customers
  • Customer service
  • Human advisors

In an era when investment products and robo-advisories have moved increasingly to passive strategies, Merrill is taking an active approach with its Guided Investing service. Just don’t call it a robo-advisor, says Merrill, because the service is guided by human investing pros.

Merrill offers two tiers of service: a core online plan that comes with the basics and a premium tier that allows you to work with a human to answer your more detailed questions. Unfortunately, Merrill doesn’t offer some key benefits of top robo-advisors, such as tax-loss harvesting or access to extensive tools, while charging a management fee that’s among the tops in the industry.

Investors looking for a cheaper offering could turn to almost any other robo-advisor and still get more features, including a range of tools to help you analyze your portfolio and financial plan. Other top independent names include Wealthfront and Betterment, but those who want to extend a relationship with their broker might like Fidelity Go and Schwab Intelligent Portfolios.

Merrill Guided Investing at a glance

Star Rating

3.5
  • Cost: 4 of 5
  • Investments and Portfolios: 4 of 5
  • Account Types: 4 of 5
  • Features and Tools: 3 of 5
  • Customer Experience: 4 of 5
  • Account Minimum:
    $1,000/$20,000
  • Management Fee:
    0.45 percent for online; 0.85 percent for online with advisor
  • Account fees:
    $49.95 transfer out fee; $49.95 IRA close-out fee
  • Portfolio Mix:
    15 ETFs across two major strategies: market-tracking and sustainability focused
  • Fund Expense Ratio:
    Market-tracking: 0.05-0.08 percent; Sustainability focused: 0.14-0.19 percent
  • Account Types:
    Individual, joint and custodial (UTMA/UGMA) taxable accounts, traditional IRAs, Roth IRAs, SEP and SIMPLE IRAs, rollover IRAs
  • Cash Management Account:
    Can open an account with Bank of America
  • Customer service:
    Access 24/7 support via phone, chat or email, with in-person help at select Bank of America branches
  • Tax Strategy:
    No tax minimization or tax-loss harvesting
  • Rebalancing:
    Yes, as needed but computer-driven
  • Tools:
    Basic goal planning, basic goal tracker
  • Promotion:
    None

Pros: Where Merrill Guided Investing stands out

Two service tiers

Merrill Guided Investing offers two service tiers, and they’re differentiated mainly by the help of an advisor:

  • Online: The core plan gets you all the basics of the service, with portfolio management and other features.
  • Online with an advisor: This tier ups the game with access to a financial advisor, who can help you establish your financial goals or provide more personalized service.

The core program has a $1,000 account minimum, while the advisor-assisted program requires a $20,000 minimum. The prices are similarly tiered as well: 0.45 percent annually for the core online plan and 0.85 percent for the online plan with an advisor.

With this structure Merrill addresses one of the key pain points for many investors – the need for a human financial advisor to help with an investing world that many see as fraught with risk. That option is not available at all robo-advisors, but it’s often available as a service upgrade at many, such as Betterment or Schwab Intelligent Portfolios.

Active management – not passive

Merrill doesn’t want you to call Guided Investing a robo-advisor. But at some level it still is, even if it uses more of a hybrid approach, especially if you opt for the online program with an advisor. Merrill wants to distinguish its human-driven approach from the computer-driven approach of other robo-advisors, as if the latter approach weren’t created and managed by humans as well.

The company says that its portfolios are managed by “Merrill investment professionals who use a disciplined approach to asset allocation, portfolio construction and investment selection.”

But the real difference between Merrill’s offering and other robos is that Merrill manages the portfolio actively – and frankly, it’s not clear if that’s a good thing. Plenty of research has shown that active portfolio management tends to underperform more passive investing approaches.

Merrill’s chief investment officer develops the investing strategies and which ETFs or mutual funds will be used in portfolios and in what allocations. They’ll also make adjustments to the portfolio as the market moves, with the intent of reducing risk and optimizing returns.

An active approach is usually more expensive than passive investing, because it has to build in the costs of the investment pros in managing the portfolio. And Merrill is pricier (more below).

Portfolios and fund expenses

Portfolios are constructed into two broad strategies, which you can select before you finalize your sign-up:

  • Market-tracking: This portfolio tries to track the indexes using passively managed ETFs
  • Sustainability focused: This portfolio incorporates ETFs that are invested in more socially friendly companies

After you run through Merrill’s assessment of your time horizon (when you need the money), what goal you’re investing for and your risk tolerance, the service will present you with one of these two portfolio types. Regardless of your answers to these questions, you’ll have these same portfolio strategies, but your answers will affect the allocations within each strategy.

For example, if you’re focused more on the short term or are less risk tolerant, your portfolios will be more focused on bonds and less on stocks. Investors with a long-term horizon or who are more risk tolerant will have portfolios with greater allocations to stocks and less to bonds.

Merrill uses 15 ETFs to build these two strategies, and these ETFs are generally low cost. The market-tracking portfolio has an expense ratio of 0.05 to 0.08 percent, or a cost of $5 to $8 per year for every $10,000 invested. The sustainability portfolio is a bit pricier, with fees that range from 0.14 to 0.19 percent, or $14 to $19 annually for every $10,000 invested.

Merrill’s market-tracking strategy is about as cheap as you can find, and you’ll pay fees to the ETF managers regardless of which robo-advisor you go with.

Customer service

It’s hard to argue with Merrill’s customer service hours, and you can access someone at any hour, one of the highlights of the Merrill Edge brokerage experience, too. Of course, you’ll have access to your online account at any time, if you just want to check on your performance, allocations or something else.

Account types

Befitting Merrill’s heritage as a full-service broker, Merrill’s robo-advisor offering gives customers a range of account types, among the most in the sector. So you’ll find virtually all major account types here, including some that are missed by others:

  • Individual taxable accounts
  • Joint taxable accounts
  • IRA – traditional, Roth and rollover
  • Custodial accounts
  • SEP IRA
  • SIMPLE IPRA

It’s also great news if you’re already a customer at Bank of America, because you can add a robo account a little more quickly and have it all at one place.

Integration with Bank of America

One of the top features of Merrill’s robo-advisor offering is the fact that it’s integrated with Bank of America. The ability to do it all with one institution will no doubt appeal to many customers who might otherwise be tempted to go with a rival.

It’s also a benefit if you participate in the bank’s preferred rewards program, which gives you perks for keeping more of your money at the bank. One notable feature of the program is extra credit-card rewards, a perk that can make the bank’s credit cards among the industry’s best.

If you’re a member of the program you can receive discounts of 0.05 percent to 0.15 percent off the program fees, depending on how much you have across your Bank of America accounts. The lowest tier begins with $20,000 average daily assets and ranges up to $100,000. So at the lowest tier, your management fee drops from 0.45 percent to 0.40 percent. At the highest level, your fee would fall from 0.45 to 0.30 percent, a significant discount.

Quick comparison of Robo-Advisor options:
Robo-Advisor Overall Rating Cost Rating Investments and Portfolios
Merrill Guided Investing logo
4 4 of 5
Wealthfront review 2021 logo Read Our Review
5 5 of 5
Fidelity Go review 2021 logo Read Our Review
4.5 3.5 of 5
Schwab Intelligent Portfolios review 2021 logo Read Our Review
5 4.5 of 5

Cons: Where Merrill Guided Investing could improve

Management fees

Whether you’re going for Merrill’s online service (0.45 percent of assets annually) or its online service with an advisor (0.85 percent), you’re paying toward the top of the robo-advisor market. That would mean for every $10,000 you have invested here, you’d pay about $45 annually with basic service or $85 annually with the premium tier. It’s worth noting that Merrill charges the fee on a monthly basis, but you’ll pay at the annualized rate for whichever service tier you’re using. So for that same $10,000 balance, you’d pay $3.75 or $7.08 a month, depending on the tier. And to be clear, this fee comes on top of the fund fees, so the real total cost is a bit higher.

Merrill’s core service should be compared to the entry-level services at rivals, whether that’s Betterment or Wealthfront or some other player. These two peers charge 0.25 percent annually for their service, or about $25 annually. So they’re significantly cheaper in percentage terms. And if you go with Betterment’s premium tier (which requires a $100,000 minimum), you’ll pay 0.4 percent annually while enjoying unlimited access to human advisors.

So Merrill is on the higher end of the market, and that doesn’t include robo-advisors that charge a flat monthly fee (such as Ellevest) or nothing at all (SoFi Automated Investing or Schwab Intelligent Portfolios.) Even if you factor in its preferred rewards perks, Merrill is still at least a bit higher than most of the field, when it probably should be lower cost for the plan’s members.

Tools

Merrill doesn’t offer a lot in the way of tools for its Guided Investing program, whereas it’s great in its overall Merrill Edge brokerage. It has basic goal planning, so you can identify a specific objective for your plan (retirement, a large purchase or something else) and a basic goal tracker.

Where Merrill does provide some extra value is in its education content, with weekly explainers on the markets and economy and other educational pieces on ETFs, estate planning and more.

Tax strategy

One of the downsides of the human-first approach at Merrill Guided Investing is the lack of a tax-loss harvesting strategy. This strategy uses a computer algorithm to sell losing investments in order to generate a tax break and then re-invest in similar assets. It’s one benefit to using an AI-driven approach, given the complexity and tedious nature of the process.

At a few other robo-advisors, such as Betterment and Wealthfront, tax-loss harvesting is a key feature, and both use research to show that the strategy drives real improvements in returns.

Besides this premium feature, it’s not clear if Merrill offers other tax minimization strategies.

Bottom line

Merrill Guided Investing will fit best with investors who already have a relationship with Bank of America or Merrill and who would like to expand that with a managed portfolio (and may be able to do so at a reduced cost with the preferred rewards program). Merrill’s fees are higher than other rivals’ while it offers only basic portfolio features and not more premium elements such as tax-loss harvesting or advanced tools.

Those needing more features at a lower price could turn to Wealthfront, Ellevest and SoFi Automated Investing. Meanwhile, those looking for a human advisor could turn to Betterment or Schwab Intelligent Portfolios or hire one à la carte from a service such as Ellevest.

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