In the race to launch a robo offering, Bank of America Corp. is diving in head-first with Merrill Edge Guided Investing, according to published reports. The firm intends to launch the program in early 2017.


The Charlotte N.C.-based Bank of America formed Merrill Edge (see our review) in June 2010 and industry leaders at the time were unsure of what they were trying to accomplish. But fast forward six years and the brokerage platform has grabbed $132 billion in assets and is seen as a success. The offering uses a mix of bank brokers who work at call centers with the backing of the firm’s giant online system.

Now, Merrill Edge will be embracing the robo-arena already cluttered with Betterment LLC and its $6 billion in assets and Wealthfront with its more than $3 billion in assets.  Just recently, Personal Capital, a firm that attracts clients with more than  $300,000 in assets and uses a combination of advisors along with technology, grew 50% in just six months hitting the $3 billion mark.

Merrill is hoping to repeat the success of Merrill Edge and is eager to begin collecting assets like its competition. The new robo offering is an an expansion of Merrill Edge Advised and Self Directed offerings. The robo’s minimum is just $5,000 which is similar with Fidelity Go’s $5,000 minimum. Betterment doesn’t have a minimum and Wealthfront has a $500 minimum.  Merrill is charging 0.45% – which doesn’t include underlying fund fees. The fees are higher than Betterment’s fees which are just .15% to 0.35% annually.


Aron Levine, head of Merrill Edge, was quoted in the Wall Street Journal, explaining the robo is “a natural extension of our investment offerings from Merrill Lynch.” The offering will include automated advice paired with human insight as well, he explained.

Levine told the Wall Street Journal that the robo will be managed by Merrill’s chief investment officer which makes it starkly different from others in the industry that depend solely on algorithms. It appears the robo will also include investment questions to clients pertaining to risk involving income and other risk factors, which are common place in the robo arena.

Merrill Lynch will likely have success convincing existing clients to move assets to this new platform, says Scott Smith, director of advice relationships for Boston-based Cerulli Associates, a financial services consulting firm.

The firms that appear to be winning the most assets are existing brokers who already have a treasure trove of assets and have created a robo offering. For instance, Vanguard’s Personal Advisor Services – which officially launched one year ago – now has a staggering $41 billion in assets. The firm added $10 billion in assets in six months.

“If you look at the other firms, the assets are largely coming from internal clients looking for different solutions. They want more advice. It’s largely internal conversions but there will be other assets too. I really think everybody has to have something like this at some point. It’s a matter of re-branding,” Smith says.


Smith points out that Merrill is following the perfect recipe with its robo by making the price point 45 basis points and offering a lower minimum of $5,000.

But Smith said investors are more likely to choose a brand they like – even if it is a bit more money.

“A lot of investors don’t understand the pricing and if they do, the better off they are, but they want to go with a provider that they trust and that’s a lot more important than a couple of basis points here and there,” Smith says.