Merrill Guided Investing Expert Review
How Does Merrill Guided Investing Create my Portfolio?
Most robo-advisors do little more than track the general financial markets. But Merrill Edge Guided Investing, or MEGI for short, is for you if you’re looking for a robo-advisor that actively attempts to outperform the market.
The Merrill Lynch robo-advisor offers all the services of other robo-advisors, including creating your portfolio and managing your investments through periodic rebalancing and automatic reinvestment of dividends. But they also rely on human-led rebalancing efforts; human financial professionals shift your investment allocation as they feel it necessary to take advantage of changes in the markets.
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Fees
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Investment Choices
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Ease of Use
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Tool & Resources
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Merrill Guided Investing Review
Automated and actively managed Merrill Lynch Robo Advisor. Part of Merrill Lynch and Bank of America family.
Pros
- Part of the Merrill, Bank of America family
- Chance to outperform the market with tactical strategies
- Good customer service access
Cons
- High management fees
- No financial advisors
- No tax loss harvesting
The Merrill Guided Investing robo also offers the advantage of being part of Merrill Edge, an investment arm of Bank of America, which offers full service investing at discount pricing. You can have an account where you do self-directed investing, while maintaining a percentage in a Merrill Edge Robo-advisor account where it will be professionally managed for you.
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Since both Merrill Edge and the Merrill Lynch Robo Advisor are part of Bank of America, you can also do your banking with the same family of companies where you invest. It’s one-stop financial management at its best.
Merrill Guided Investing is managed by Managed Account Advisors, LLC, which is an affiliate of Merrill Lynch.
Merrill Edge Guided Investing Review – Features at a Glance
| Overview | Automated investment management robo-advisor platform using active management, a mix of proprietary software and human investment guidance |
| Minimum Investment Amount | $1,000 for Merrill Guided Investing. $20,000 for Merrill Guided Investing with an Advisor. |
| Fee Structure | 0.45% of AUM for Merrill Guided Investing; there is also a fee of between $0.01 and $0.03 per $1,000 on transactions within your account. 0.85% AUM for Merrill Guided Investing with an Advisor; additional trading fees apply. Bank of America Preferred Rewards members may qualify for reduced account management fees, as low a 0.30% AUM for Merrill Investing and 0.70% AUM for Merrill Investing with an Advisor. |
| Top Features | Active account management that attempts to outperform the general stock market, and not just match it; connection with both the Merrill Edge investment brokerage and Bank of America. |
| Free Services | N/A |
| Contact & Investing Advice | Available by phone, live chat, and email , all services are 24/7 |
| Investment Funds | Low cost, index-based mutual and exchange traded funds (ETFs) primarily from the Vanguard and iShares fund families. |
| Accounts Available | Individual and joint taxable accounts; traditional, Roth and rollover IRAs; SEP and SIMPLE IRAs; custodial and 529 accounts. |
What Differentiates Merrill Guided Investing from Competitors?
Unlike most robo-advisors, the Merrill Edge Guided Investing Robo Advisor isn’t fully algorithm based. That means it’s not a purely passive investment platform. Instead, it uses a mix of proprietary software and human guided investment strategies. They do make use of low-cost index-based ETFs, which are passive by their very nature. But the use of those funds is managed on an active basis by humans at Merrill Edge.
The Merrill Lynch robo-advisor uses what it refers to as Tactical Strategic Shifts. Asset allocations are established when your portfolio is first created, but management will make changes based on shifts in the financial markets. For example, if management believes emerging markets will outperform US based stocks, they’ll increase exposure to emerging markets, while reducing the position in US stocks.
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This style of investment management has the goal of outperforming the general stock market. If you prefer this type of investing to the purely passive strategies used by most other robo-advisors, the Merrill Edge automatic investment plan Is a good choice.
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Who Benefits from the Merrill Edge Guided Investing Robo-Advisor?
The Merrill robo-advisor can benefit many people, including:
Existing Bank of America or Merrill Edge Customers.
As noted above, one of the main advantages of investing through the Merrill Edge robo-advisor is the potential to outperform the market. But still another advantage is the connection the platform has with both Merrill Edge and Bank of America. MEGI is essentially a Bank of America robo-advisor. Existing Bank of America and Merrill Edge customers will benefit from working with the Merrill Edge robo.
Merrill Edge is one of the better known and well-regarded diversified investment brokerage firms. The platform offers a wide variety of trading tools and educational resources for the self-directed investor. Both stocks and ETFs can be traded with zero commissions, like many competitors.
Bank of America offers another valuable connection. It’s one of the largest banks in the country, and has branches in most US states, in addition to more than 2,000 financial centers (expanding to 2,800 by 2020). Each of those financial centers is staffed with a Merrill Edge Financial Solutions Advisor, who can provide you with assistance in your investing activities.
You can view your activity for all three accounts from the same internet platform, simplifying your financial life and making inter-account transfers effortless.
You may also qualify for discounts on your account management fees if you are a Bank of America Preferred Rewards customer.
Find out: M1 Finance vs. Betterment – Which is the Best Robo-Advisor for Me?
People who prefer hands-off and actively managed investing.
The Merrill Lynch robo-advisor provides actively managed accounts by leveraging its strength as part of the Bank of America and Merrill Lynch family. Investors who want to let basic human oversight on their accounts run the show will be happy working with the Merrill Edge robo-advisor.
Investors who want hands-off investing will also appreciate the ease of portfolio creation. There is a downside, however: investors cannot customize their recommended portfolios.
Investors who want varied account types.
Merrill Guided Investing offers diverse account types.
- Individual or joint taxable accounts
- Traditional, ROTH, SEP, Simple, and Rollover IRAs
- Custodial accounts
- 529 accounts
Existing trusts can be transferred to the Merrill Lynch Robo Advisor, but new trusts can’t be opened, at present.
Whether you use a robo-advisor or not, you must sign up for the FREE money management dashboard and reports below. I use it myself!
Merrill Edge Guided Investing Robo-Advisor Drill Down
The Merrill Lynch robo-advisor starts by determining your investment goals, risk tolerance, and time horizon. Risk tolerance is determined by completing a brief questionnaire (five questions), which is the typical way robo-advisors establish your risk tolerance.
Your time horizon is determined by the target year by which you plan to access some or all of the assets in your account. If you’re opening a retirement account, your retirement age will be the target year.
Your investment strategy is created based upon your responses to the initial questionnaire.
The Merrill Edge Chief Investment Office (CIO) team is at the helm of the portfolio creation for Merrill Edge Guided Investing. They create the asset allocation and perform the investment analysis and portfolio construction. The team also makes the short-term tactical adjustments and selects the ETFs for each strategy.
Finally the CIO team reviews the portfolios and provides investment oversight.
The Merrill Edge robo-advisor is helpful for retirement planning, so the robo offers a bit more guidance for individuals who are setting up retirement accounts. However, all customers benefit from the Merrill Lynch specialty team which supports portfolio creation, asset allocation, and rebalancing.
Your target asset allocation will include between 0% and 100% in each of 4 asset classes, including, equities, fixed income, alternative investments, and cash. Positions are held in low cost, index-based ETFs.
There are five target asset allocations:
- Conservative
- Moderately Conservative
- Moderate
- Moderately Aggressive
- Aggressive
A conservative asset allocation will be mostly invested in fixed income assets and cash, while an aggressive allocation will be invested primarily in equities. However, asset allocations will be adjusted based on Tactical Strategic Shifts identified in the financial markets. That’s the active management part of the Merrill robo advisor investment strategy.
Changes to your asset allocation can come about as a result of changes in your financial situation, time horizon, risk tolerance, or other reasons. Rebalancing of your portfolio will occur as determined necessary by investment management.
Merrill Lynch, Pierce, Fenner & Smith is the custodian for MEGI accounts.
Merrill Edge Guided Investing Robo-Advisor Sign-up Process
To open a Merrill Lynch Robo-advisor account you must:
- Be a resident of the United States
- Be at least 18 years old
- Have a valid Social Security number
The application process takes place entirely online. As is usually the case with robo-advisors, your portfolio will be based on three factors: your investment goals, your time horizon, and your risk tolerance.
You’ll set an investment goal, either for retirement or for a general investing goal. An investment strategy will be designed by MEGI investment professionals. You’ll need to review that strategy and determine if it’s acceptable to you. If so, you then fund your account.
You can fund your account by depositing either cash or securities. If you deposit securities, management will determine if they are acceptable within the scope of the asset allocation determined for you. If not, the securities will be sold and replaced with appropriate investments.
Merrill Edge Guided Investing Pros and Cons
Merrill Edge Guided Investing Robo-Advisor Pros
- The Merrill robo-advisor offers the ability to outperform the general market through portfolio adjustments based on Strategic Tactical Shifts. The vast majority of robo-advisors strive only to match the market.
- The connection with Merrill Edge means you can participate in self-directed investing on a full-service investment brokerage platform, in addition to your MEGI managed portfolio.
- The connection with Bank of America enables you to bank where you invest; Bank of America Preferred Rewards members also get a discount on their portfolio management fees, which brings the Merrill robo-advisor more in-line with other competitors.
- Access to more than 2,000 Bank of America financial centers, a feature almost unique among robo-advisors.
- Human financial professionals guide the process. At the basic Merrill Edge Guided Investing level, the Merrill Lynch specialty team handles portfolio rebalancing and allocation; clients can also pay higher AUM fees for access to a dedicated human advisor.
- No proprietary ETFs. Some robo-advisors stock their clients’ portfolios with their own ETFs; Merrill robo-advisor investors are given a range of investment options from other sources.
- Access to research tools, including a library of articles on investing.
- Telephone access 24/7 is a nice advantage for those working around the clock.
Merrill Edge Guided Investing Robo-Advisor Cons
- The initial investment requirement is high at $1,000. Many robo-advisors allow you to start with no upfront investment at all.
- No financial advisors for Merrill Guided Investing clients.
- The fee structure of 0.45% and 0.85%, for financial advisor access is definitely high among robo-advisors. Betterment and Wealthfront charge just 0.25% for their basic services. Among competing large broker robo-advisors, Charles Schwab Intelligent Portfolios has no management fee at all.
- The Merrill Edge robo does not offer tax-loss harvesting for taxable accounts.
- No inherited IRAs or new trust accounts available at this time, though Merrill Edge is planning to add these options in the future.
- Portfolios must be funded before clients can see the breakdown of investments. We see this as a major disadvantage, as investors need to know, in advance, what they are investing in.
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Merrill Edge Guided Investing Robo-Advisor Review Wrap Up
Is Merrill Guided Investing Right for me?
The biggest drawback of Merrill Edge Guided Investing is the annual management fee. At 0.45% it’s on the high end of the robo-advisor fee range. However, the platform provides active investment management that holds the potential to outperform the market. Other robos can charge lower fees because they only attempt to match the market, which does not require human investment management.
The ability to outperform the market may be more important in a less predictable market environment than we’ve had in recent years. Strategic Tactical Shifts may enable MEGI to take advantage of market segments likely to outperform the general market in a less stable market environment. Time will tell if their stab at active management will outperform competitor’s passive approaches.
The Merrill Edge connection is also important. By investing with the Merrill Edge Guided Investing robo-advisor you’re eligible for the “Preferred Rewards” program with lowered fees and other benefits.
If you’re a new investor, you might want to start with a MEGI account as a basic investment foundation. But over time, you can try your hand at self-directed investing in funds and individual securities on the Merrill platform. The Merrill Edge platform make’s it easy to access active trading or the Merrill Edge Guided Investing robo-advisor, all in one place. You can have both managed investments and your own trading account.
It should also go without saying that Merrill Edge automatic investment plan is a natural choice for the millions of Bank of America customers. With the combination of the two, they can invest with the same corporate family they bank with.
If you’d like more information, or if you’d like to open up an account, visit the Merrill Edge Guided Investing website.
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Methodology
Betterment was reviewed on June 17, 2023 and data and information for this review is from the January 2022 through June 2023 period.
We currently review 31 robo-advisors. All Robo-Advisor Reviews are ranked and rated based upon the entire pool of digital and hybrid investment platforms. The ranking system is not designed to provide favorable or unfavorable responses. The Ranking uses a one through five star system. The four criteria and index to ranking criteria:
- Fees – Robo advisory fees range from free to 1% of AUM. Lower fees receive higher rankings, while higher fees are awarded lower rankings. In general, fees are considered in contrast with other robo-advisors as well as within the sphere of traditional financial advisors.
- Investment Choices – Investment choices range from four funds on up to more than twenty fund choices. Investment choices also span various investment strategy portfolios and access to ETFs and stocks. Robo advisors with greater fund and strategy choices receive higher rankings. Those with fewer options receive lower scores.
- Ease of Use – This category covers the User Experience or UX. Platforms with clear menu items and easy access to the platform features receive higher marks than more obtuse websites and those which are more difficult to navigate.
- Tools and Resources – Platforms with richly populated “Frequently Asked Questions”, Educational articles, Videos, Calculators, and Tools receive the highest marks.
Investors should use the ranking system in conjunction with the written review and their own assessment of the robo advisor’s website to make their own investment management provider decisions.
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.
Barbara A. Friedberg and Alexandra DeLuise also contributed to this review.
