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Merrill Guided Investing review 2023

Updated February 2, 2023
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Merrill Guided Investing: Best for

  • Bank of America customers
  • Customer service
  • Human advisors

Merrill Guided Investing distinguishes itself from robo-advisor rivals by using a team of human professionals to handle investment decisions, though to clients that difference will likely feel moot. The service offers the core investment management function but does so without a lot of frills offered by the top players in the space. Still, it does offer access to human advisors for an extra fee, something that is not always standard in the space. Merrill’s service offers yet another reason for customers of its parent, Bank of America, to keep their business under one roof, especially if they can take advantage of discounts on its higher-than-standard management fee.

Other robo rivals offer a greater selection of features at a lower price point, including Wealthfront and Schwab Intelligent Portfolios, though you won’t get access to human advisors in the latter unless you pay a monthly fee. Or if you want to keep your financial business with one provider, many other big banks and institutions also offer credible robo-advisors, often at a lower cost.

Merrill Guided Investing: In the details

Broker logo
3.5
Rating: 3.5 stars out of 5
Bankrate Score
Cost
Rating: 4 stars out of 5
Investments and Portfolios
Rating: 3 stars out of 5
Account Types
Rating: 3.5 stars out of 5
Features and Tools
Rating: 3 stars out of 5
Customer Experience
Rating: 5 stars out of 5
About Bankrate Score
Account Minimum
$1,000/$20,000
Management Fee
0.45 percent for online; 0.85 percent for online with advisor
Portfolio Mix
15 ETFs across two major strategies: market-tracking and sustainability focused
Fund Expense Ratio
Market-tracking: 0.07-0.09 percent; Sustainability focused: 0.13-0.18 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
Rates as of January 4, 2023 at 5:41 PM

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. SoFi Automated Investing and Wells Fargo Intuitive Investor both provide the option of speaking with advisors for no additional cost.

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 office 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).

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, 0.10 percent, or 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 $50,000. So at the lowest tier, your management fee drops from 0.45 percent to 0.40 percent. With the highest discount (for accounts with more than $100,000), your fee would fall from 0.45 to 0.30 percent, a significant discount.

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 0.07 to 0.09 percent, or a cost of $7 to $9 per year for every $10,000 invested. The sustainability portfolio is a bit pricier, with fees that range from 0.13 to 0.18 percent, or $13 to $18 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 IRA

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 your financial accounts all in one place.

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 basic service should be compared to the entry-level services of 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 offers a lot in its Merrill Edge brokerage. But Guided Investing 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 educational 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, a regrettable hole in the service on offer here.

Review methodology

Bankrate evaluates brokers and robo-advisors on factors that matter to individual investors, including commissions, account fees, available securities, trading platforms, research and many more. After weighting these objective measures according to their importance, we then systematically score the brokers and robo-advisors and scale the data to ensure that you are seeing the top options among a field of high-quality companies. Read our full methodology.