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Merrill Lynch vs Fidelity Investments

Fidelity vs Merrill Lynch 2014: Account Pricing, Commissions, Fees

Fidelity Investments

Merrill Lynch

  • Stocks and ETFs: $7.95
  • Stocks and ETFs broker assisted: $32.95
  • Stocks and ETFs FAST (automated service phone): $12.95
  • Options: $7.95 + $0.75 per contract
  • Mutual funds: $75
  • Bonds (U.S. Treasury Auctions, including TIPS Auctions, U.S. Treasury Bills, Notes), primary market CDs: on a net yield basis
  • GSE (Agency Securities), secondary CDs, Municipals, Corporates (BBB- or higher), CATS/TIGRS, Corporates (BB+ or lower): $1 per bond ($250 max.; $50 max if maturing in one year)
  • Commercial Paper: $50 per transaction
  • Investment products: stocks, bonds, mutual funds, options, commercial paper, forex, foreign stocks, UITs, precious metals, ETFs
  • Fidelity minimum deposit to open account: $2,500
  • All Fidelity fees

  • Stocks and ETFs: $6.95
  • Stocks and ETFs broker assisted: $29.95
  • Stocks and ETFs automated phone trades: $32.50
  • Options: $6.95 + $0.75 per contract
  • Mutual funds: $19.95
  • Merrill Edge self-directed mutual funds: 0.75% gross proceeds, $50 minimum, $250 maximum
  • Investment products: stocks, bonds, mutual funds, options, ETFs, bills, notes, bonds, CDs
  • Merrill Edge minimum deposit to open account: $0
  • All Merrill Lynch fees

Fidelity vs Merrill Lynch: Pros

Fidelity Investments

Merrill Lynch

  • Great research tools with large selection of independent research from 12 firms
  • Low-cost Fidelity mutual funds
  • Free DRIPs (dividend reinvestment plans)
  • Rich selection of investment products
  • Good banking services
  • No surcharges, except for $0.0192 per $1,000 of principal in addition to commission that is added to sell orders

  • Free trades if the account meets certain conditions
  • Good banking services including a free checking account
  • Good research tools
  • Free DRIP (dividend reinvestment, but you must call customer support to set it up)

Fidelity vs Merrill Lynch: Cons

Fidelity Investments

Merrill Lynch

  • Extremely high commissions ($75 per transaction) on non-Fidelity mutual funds
  • $12 annual Low Balance Fee for each noncore Fidelity mutual fund if balance is under $2,000
  • $75 (minimum) mutual fund Short Term Redemption Fee (if a mutual fund is sold less than 180 days after purchase)
  • High margin rates
  • Foreign currency wires cost up to 3% of principal
  • No free streaming quotes (these are available only to active traders, which requires 120+ trades per year via the Active Trader Pro platform)

  • Limited, poorly designed trading tools and charts
  • Terrible trade execution
  • Technical issues (unusable login cards, website going down, etc.)
  • Customer service complaints
  • Poor selection of investments
  • High margin rates
  • Mutual funds subject to self-directed short-term redemption fee of $39.95 if held less than 90 days

Merrill Lynch vs Fidelity Investments: Comparison Summary

Fidelity Investments (Fidelity Investments Review) is one of the best known and largest online brokerage houses in the nation. Merrill Lynch (Edge) (Merrill Lynch review) is a new marketing reincarnation of almost bankrupt and rescued at the last minute Merrill Lynch.

When it comes to costs for stock/ETF trades, both companies lowered their commissions to a much more reasonable levels: $7.95 (Fidelity) and $6.95 (ME). These rates are about average in the industry.

Fidelity Investments provides its customers with richer than Merrill Lynch selection of investment products, access to great independent third-party investment research as well as many low cost Fidelity mutual funds.

The company is a better choice for novice investors, even though it did not make it into our list of Best Brokerages for Beginners.

The internet is full of complaints from Merrill Lynch's customers on the whole range of issues: trading tools bugs, various fees, account features and mutual funds availability, order executions and customer service.

Merrill Lynch and Fidelity Investments don't charge retirement account fees (setup and annual/maintenance), though it was not enough to be included in Top IRA Firms in 2014 article.

Both brokerage houses have some advantages, but we are not excited about either of these companies. We recommend Fidelity Investments for a retirement account and to "buy-and-hold" investors. There are also other firms to consider, that offer lower commissions, excellent trading tools and client services, like Scottrade and TradeKing.
This article was updated on 8/12/2014.

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