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Overall

Merrill Edge Guided Investing, which launched in January 2017, is the newest robo-advisor, and while it lacks tools, speedy customer service and a high-quality approach to the markets help the robo shine overall.

By Blain Reinkensmeyer / February 21st, 2017 / Updated: June 1st, 2017

Dislikes
  • Goal tracking is non-existent and there is a clear lack of client tools
  • The mobile experience is buggy and poor overall

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With Merrill Edge Guided Investing launching in January 2017, the new robo-advisor was a late participant in our first annual robo-advisor Review, which we began way back in the Fall of 2016.

This review, published in mid-February, will dive into the Merrill Edge Guided Investing experience based on the features, tools, and customer service made available at launch. While on the surface this may seem like Guided Investing is at a disadvantage, my personal experience left me impressed with the robo-advisor overall. The robo-advisor has its clear standouts and drawbacks, as we will explore herein.

Investment Approach

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.

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 fill in our personal information and answer a risk-tolerance questionnaire. Both steps are industry standard and make no mistake, already having a brokerage account speeds things along (six of the eight robo-advisors included in our 2017 Review are also online stock brokers).

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 mostly painless.

The final step is formally opening and funding the account, which, thanks to our already present Merrill Edge account, was mostly painless. I say mostly because on launch day there was no simplified ACH transferring directly from Guided Investing. Instead, I had to login to my Bank of America checking account and transfer the funds. Fortunately, this was patched within the first two weeks.

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. 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).  Schwab Intelligent Portfolios is the only robo-advisor included in our 2017 Review that does not charge an annual advisory fee.

Merrill Edge Guided InvestingWealthfrontBettermentTD Ameritrade Essential PortfoliosSchwab Intelligent Portfolios
Total AUMNA$5.0 Billion$9.1 BillionNA$19.4 billion
Minimum Deposit$5,000.00$500.00$0.00$5,000.00$5,000.00
Annual Fee - $5,0000.45%0.0%0.25% 0.30%0.00%
Annual Fee - $25,0000.45%0.15%0.25%0.30%0.00%
Annual Fee - $50,0000.45%0.20%0.25%0.30%0.00%
Annual Fee - $100,0000.45%0.23%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 2017 Review. Note, this is still far less than utilizing the services of a formal advisor, which across the industry costs around 1% per year, on average.

Tools

Full-service online brokers have taken different approaches to housing their robo-advisor areas. Brokers like Fidelity, TradeKing, 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.

Merrill Edge Guided Investing account dashboard

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.

To put it simply, without question there are massive benefits to being an existing customer or client of Bank of America and/or Merrill Edge.

To put it simply, without question there are massive benefits to being an existing customer or client of Bank of America and/or Merrill Edge.

Universal account synergies aside, Guided Investing had few tools to offer at its launch. 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. To view a detailed breakdown of your holdings’ performance you must jump over to Merrill Edge, which is annoying.

Merrill Edge Guided Investing portfolio holdings

Even the goals experience is weak, showing you only the exact same hypothetical performance chart that was displayed during registration.

Even the goals experience is weak, showing you only the exact same hypothetical performance chart that was displayed during registration. On the dashboard, you are shown a clear link to, “Add a goal.” However, this simply takes you to open another account. The bottom line is that there is no formal goal-tracking experience; for that, I recommend TD Ameritrade Essential Portfolios or Betterment.

Finally for mobile, the experience is essentially non-existent. Logging into the Merrill Edge app on my iPhone 6s showed me a high-level summary of the portfolio balance, but when I clicked to view the details, I was transferred to my browser with a Merrill Lynch login screen. This login page displayed a hover bar recommending downloading the Merrill Lynch mobile app. I did that, logged in, went to view my holdings, and lo and behold, I was transferred back to my mobile browser and to the login page. Clearly, this is a poor client experience that needs to be patched asap.

It’s hard to be too tough on Guided Investing, considering the robo-advisor launched literally several weeks ago. That said, there isn’t much to be excited about yet beyond the advantages of a universal login as a current Bank of America or Merrill Edge client. I will be keeping my eye out for updates throughout 2017 and expect a more feature-rich experience for our 2018 Review.

Customer Service

After conducting 11 tests across phone, live chat, and email, Guided Investing delivered consistently quick times, together with responses, and came out on top, finishing first overall.

While the tools provided by Guided Investing failed to impress at launch, we found the customer service to be a winner. After conducting 11 tests across phone, live chat, and email, Guided Investing delivered consistently quick times, together with responses, and came out on top, finishing first overall. Considering our testing took place during the first two weeks immediately following its launch, this was an impressive feat. Second place went to TD Ameritrade Essential Portfolios.

With phone support, all of our tests were connected to a rep in less than two minutes. All our questions were answered each time, and our testers left net promoter scores of either, “good” or “great” each time. Of 47 phone tests, Merrill Edge was one of three robos to receive a perfect score.

Live chat and email yielded similarly positive experiences. Only once did we catch a customer service rep off guard and ask a question he subsequently answered incorrectly. The reps answered all our email inquiries within one business day and all live chat sessions were connected to a service agent in under one minute.

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

Merrill Edge Guided Investing launched in January, 2017, leaving us less than three weeks to fully test and rate the new robo-advisor service. Drawbacks with the service at launch included a high annual advisory fee and a clear lack of tools, including a poor mobile experience and no goal- tracking.

On the positive side, Guided Investing is backed by the market wisdom of Merrill Lynch and has a clean investment approach that is better than most. Customer service was also great across the board, finishing first in 2017. Lastly, the benefits of a universal login and easy ACH transfers make the robo an easy win for current Bank of America and Merrill Edge clients.

At the time of this review’s publication in February, Merrill Edge Guided Investing had been live for barely a month and a half. While the robo-advisor has its clear weaknesses, the foundation is strong and the client experience should only become more feature rich as 2017 progresses.

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.

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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.

View all Merrill Edge Guided Investing Fees & Features
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.


Ratings Overall

Summary

Cost
Customer Service
Investment Approach
Platforms & Tools

Best in Class

2017
 6

Overall
  • Customer Service

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