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Overall

Due to its higher cost and lack of tools, Merrill Edge Guided Investing is a viable option solely for current Bank of America and Merrill Edge customers, thanks to its convenience.

By Blain Reinkensmeyer / January 24th, 2018 / Updated: April 18th, 2018

Dislikes
  • Goal tracker is limited in scope and functionality
  • No dedicated mobile experience
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Review Sections:

Merrill Edge Guided Investing launched in January 2017 and is one of the newer players in the robo-advisor space.

Despite the service being young, it is clear the Merrill Edge team took great care building out the client experience. From onboarding to portfolio monitoring, Guided Investing provides clients the basic foundation for what they need to succeed. This is especially true for current Bank of America Merrill Edge customers, as we will explore below.

Does this justify Guided Investing’s high annual portfolio management fee though? It depends.

Investment Approach

With Guided Investing’s clear understanding of the markets, clients can sleep well knowing they are in great hands, thanks to the collective wisdom of the Merrill Lynch investment team.

Unless investors are already clients of Merrill Edge, they are most likely unaware of the fact that Merrill Edge is backed by the historic brand, Merrill Lynch. The latter, founded in 1914, was acquired by Bank of America in 2009 for $50 billion, and Merrill Edge was launched in June 2010.

With Guided Investing’s clear understanding of the markets, clients can sleep well knowing they are in great hands, thanks to the collective wisdom of the Merrill Lynch investment team. While Guided Investing is a robo-advisor, meaning client portfolios are shaped by market theory computer algorithms instead of actual humans, the knowledge behind the recommendations comes from Merrill Lynch.

To sign up for Guided Investing and fund our new portfolio, we first had to answer a risk-tolerance questionnaire and fill in our personal information. Both steps are industry standard and make no mistake, already having a Merrill Edge brokerage account speeds things along.

Merrill Edge Guided Investing risk questionnaire

The purpose of a risk-tolerance questionnaire is to determine portfolio suitability. With no human advisor to call for psychological support during a market downturn, it is critical to have a portfolio that is properly diversified and caters to your personal risk tolerance.

It should be noted, however, that not all questionnaires are the same. The robo space is still new and methodologies differ from firm to firm. During the Guided Investing questionnaire, I was impressed by the wording of the questions as well as the optional educational commentary surrounding them. When we completed the Guided Investing questionnaire, we were assigned an Aggressive portfolio allocation for our preset goal of saving for retirement.

Merrill Edge Guided Investing portfolio construction

With our risk tolerance established, we were assigned a portfolio and shown hypothetical projections of where we might end up in 2042 (we selected a random target retirement year in the future during the questionnaire). We were then presented with the option of adjusting our initial investment and/or monthly contribution amount. Doing so immediately recalculates the hypothetical projection chart so you can see exactly how your changes affect your future, a nice touch.

Merrill Edge Guided Investing recommended portfolio

After this screen, another screen provides even further context surrounding your assigned portfolio including a breakdown of the portfolio holdings. It is important to note that you cannot adjust your assigned portfolio. To do so, you must retake the risk tolerance questionnaire, which is an important net benefit. Several robo-advisors allow complete control to easily adjust your risk profile, even after the portfolio is funded, which only opens the door to making a critical mistake of adjusting during a period of market turbulence.

Another important note regarding the portfolios Guided Investing constructs is that they are built exclusively with low-cost exchange traded funds (ETFs) provided by iShares and Vanguard. Nearly every robo-advisor uses ETFs exclusively, but the focus on Vanguard and iShares keeps fund costs exceptionally low (fees are broken down in the next section, “Cost”).

The final step is formally opening and funding the account, which, thanks to our already present Merrill Edge account, was painless.

Cost

Like nearly every other robo-advisor, Merrill Edge Guided Investing charges an annual advisory fee coupled with the expense ratios charged by the exchange trade funds (ETFs) held in the portfolio. The required minimum deposit to open an account is $5,000.

Guided Investing’s annual fee is 0.45%, which is more expensive than every other robo-advisor we tested.

Guided Investing’s annual fee is 0.45%, which is more expensive than every other robo-advisor we tested. For example, a $10,000 portfolio would incur an annual fee of $45 per year (10,000 x 0.0045) and a $250,000 portfolio would be charged $1,125 per year (250,000 x 0.0045).

View All FeesMerrill Edge Guided InvestingWealthfrontBettermentTD Ameritrade Essential PortfoliosSchwab Intelligent Portfolios
Total AuMNA$10 Billion$11.8 Billion$16.6 Billion$30.6 Billion
Minimum Deposit$5,000.00$500.00$0.00$5,000.00$5,000.00
Annual Fee - $5,0000.45%0.25%0.25% 0.30%0.00%
Annual Fee - $25,0000.45%0.25%0.25%0.30%0.00%
Annual Fee - $50,0000.45%0.25%0.25%0.30%0.00%
Annual Fee - $100,0000.45%0.25%0.25%0.30%0.00%
Annual Fee - $1,000,0000.45%0.25%0.25%0.30%0.00%
Cost 3 Stars 4.5 Stars 4.5 Stars 4 Stars 5 Stars

According to Guided Investing’s team, the average net portfolio expense ratio charged by the ETFs is between 0.08% - 0.10%. Low portfolio expense ratios are common among robo-advisors because they almost all exclusively use ETFs for portfolio makeup.

Added to the 0.45% annual advisory fee, clients can expect to pay 0.53 – 0.55% per year, the highest of all the robo-advisors included in our 2018 Review.

When we asked about its higher price tag, Merrill Edge highlighted its focus on having trained staff at many of its branch offices ready to assist with general account questions alongside portfolio construction, which is driven by a team of professionals at Merrill Lynch.

Our testing of Merrill Edge revealed exceptional customer service. Furthermore, their approach to portfolio construction is unique, although the service does lack tax-loss harvesting. W

Tools

Full-service online brokers have taken different approaches to housing their robo-advisor areas. Brokers like Fidelity, Ally Invest, and ETRADE integrate the robo-experience directly into the primary brokerage experience, while Charles Schwab, TD Ameritrade, and Merrill Edge use a separately designed area catering specifically for the robo experience. While both have their advantages and disadvantages, I have found the latter to provide a better client experience overall.

While Guided Investing is housed in its own area, clients can quickly switch over to the traditional Merrill Edge account experience.

While Guided Investing is housed in its own area, clients can quickly switch over to the traditional Merrill Edge account experience. Furthermore, as alluded to earlier, transferring assets between your accounts is a breeze thanks to the instant ACH transfers. Finally, all your accounts, from banking to brokerage, to robo are displayed front and center, regardless of where you login, which I certainly appreciated as I have a Merrill Edge account as well as a Bank of America checking account.

Universal account synergies aside, Guided Investing has few tools to offer. You can see your portfolio summary, view your current portfolio performance, and do a high-level assessment of your current holdings, but that’s about it.

merrill edge guided investing portfolio analysis

Oh, and for mobile functionality, you can check that off your list too. Guided Investing has yet to launch a dedicated mobile app. The website was upgraded to be mobile friendly in 2017 so new clients can at least sign up and establish their account, which is certainly helpful, but that’s about it. The rest of the mobile experience is still under development. 

Even the goals experience is weak, showing you only the same hypothetical performance chart that was displayed during registration. On the dashboard, you are shown a clear link to, “Add a goal.” However, this merely takes you to open another account.

Merrill Edge Guided Investing account dashboard

The bottom line is that there is no formal goal-tracking experience, which for a robo-advisor, is a critical part of the client experience; for that, I recommend Betterment, Wealthfront, or TD Ameritrade Essential Portfolios.

Other Notes

As a full-service broker, Guided Investing offers clients the flexibility to migrate to a formal advisor-managed account through Merrill Lynch, if desired. On the other end, you can easily transition to a completely independently managed portfolio through Merrill Edge.

Guided Investing does not currently offer tax loss harvesting.

Final Thoughts

If you are a current Bank of America or Merrill Edge client already, then the convenience is worth considering.

Merrill Edge Guided Investing launched in January 2017, and has several notable weak points, including a high annual advisory fee and a clear lack of tools, including goal tracking and an advanced retirement calculator. Progress has been consistent but slow; the service is still in its infancy.

On the positive side, Guided Investing is backed by the market wisdom of Merrill Lynch and provides a clean investment approach. Also, the benefits of a universal login and easy ACH transfers make the robo an easy transition for current Bank of America and Merrill Edge clients. Finally, Merrill Edge offers a good selection of retirement education articles along with a variety of planning tools; they just haven’t yet made their way into the Guided Investing experience.

So, is Guided Investing worth being a client for today? If you are a current Bank of America or Merrill Edge client already, then the convenience is worth considering. On the other hand, if the overall client experience matters to you, compare robo-advisors to seek better available options.

Methodology

To find the best robo-advisors we assessed, rated, and ranked eight different firms. Instead of relying on website information and marketing materials as most editorials do, we opened and funded an account with each robo-advisor to acquire a true client experience.

Reink Media Group (RMG) remains committed to providing transparent and unbiased reviews of various financial services and segments, including Robo-Investment Advisors (“RIA’s”). Although exempt from registration as an investment advisor under the Investment Advisors Act of 1940, 15 U.S.C. §80b-1, et seq, RMG works tirelessly to ensure compliance with all applicable Security and Exchange Commission rules and regulations for entities which perform reviews and/or receive payments for advertising and solicitation. Please be advised that for purposes to this Review, RMG utilized a live account with actual funding which was later closed once the Review’s test period was complete.


Blain Reinkensmeyer

Reviewed by Blain Reinkensmeyer Blain heads research at StockBrokers.com and has been involved in the markets since placing his first stock trade back in 2001. He developed StockBrokers.com's annual review format seven years ago, a format broker executives consider the most thorough in the industry. Blain currently maintains funded accounts with more than a dozen different US-regulated online brokers and has executed thousands of trades throughout his career. He enjoys sharing his experiences through his personal blog, StockTrader.com.

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Ratings Overall

*Merrill Edge Guided Investing was not included in the latest annual review, as a result this data may not be up to date.

Summary

Cost
Investment Approach
Platforms & Tools

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