Merrill Edge Review: Self Directed Account Fees and Minimum Deposit
|Stocks and ETFs|| $6.95|
|Stocks and ETFs broker assisted|| $29.95|
|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|
|Bonds|| On a net yield basis|
Opening a Merrill Edge self directed account is easy, involving the usual filling out of forms on line and then a quick "Yes or No" decision regarding approval of your account.
The problem comes in getting the first deposit into the account. Where most on-line brokers ask for the routing number and account number of a checking or
savings account for funding, Merrill Edge account holders are not afforded this convenience. Merrill Edge would rather have you fill out a paper form that authorizes
the future transfers of funds between listed bank accounts and the newly opened Merrill Edge account. Merrill Edge needs to move to a system of confirming an account by making two small deposits and then receiving a confirmation from the account holder.
Nearly every other financial institution these days uses this method to everyone’s satisfaction.
Once the funding paperwork has finally been forwarded to the offices of Merrill Edge, moving money into and out of the brokerage account is very easy.
If the account holder has a cash balance in the account, a Merrill Edge debit
card can be used to withdraw funds directly from the account wherever VISA cards are accepted worldwide. Check writing against a cash balance is also offered. Securities can
be sold to raise additional amounts of cash for withdrawal, but funding with an equity or mutual fund sale requires a number of days for the cash to “settle”
before it becomes available for withdrawal.
Merrill Edge Mutual Funds Review
There are more than 3,900 mutual funds available for trading at Merrill Edge. Exactly 850 come with no transaction fee, and 828 have neither transaction fee nor load.
While the number of funds is rather low, the broker does offer a very good screener to sort through them. Users can search by Morningstar category, load type, fund
objective, ratings, and 12b-1 fees. Other criteria that can be selected include fund inception date, worst 3-month performance, and taxable equivalent yield. Despite
the small number of funds, Merrill Edge does offer a lot of educational materials on its website for mutual fund investors. There are excellent fund reports available
from Merrill Lynch free of charge. There are also mutual fund tutorials, articles, and self-guided courses on the website.
Minimum purchase amounts vary by fund. Some products are as low as $250, while others are as high as $3 million. Merrill Edge charges nothing for mutual funds with
low balances. Funds with transaction fees cost $19.95 to buy, sell, or exchange. The broker also charges a short-term trade fee of $39.95 if an NTF fund is sold less
than 3 months after purchase.
Roth, Traditional, SIMPLE, SEP, and Rollover IRA's are available with this broker. There are no setup fees, inactivity fees, or annual fees for a retirement account.
There is also no minimum deposit requirement to open an IRA. However, the firm does impose a $49.95 fee for closing out or transferring an IRA.
Investors will find helpful tools and information covering a wide variety of retirement issues on the Merrill Edge website. For instance, there is an IRA selector
that leads users through a series of questions that help determine whether a Roth or Traditional account would be a wiser choice. The broker also offers a required
minimum distribution calculator, which estimates the minimum account holders must withdraw from an IRA to meet IRS requirements. Many articles and videos on the
broker's website also cover other topics important to retirement savers, including controlling health care costs and utilizing Social Security.
Merrill Edge Review: Website/Trading Platform/Tools
The Merrill Edge website is well-designed and easy to use. It has more educational information and better tools than Vanguard's website, for example. The site has drop-down menus that present a lot of information in a user-friendly format.
Trades for a variety of securities can be executed using the web browser. Important information is displayed for each security, such as the day's price range, current bid-ask spread, and the day's volume.
A chart with technical data is available. MACD, Chaikin's volatility, and RSI are a few of the technical studies that can be used. The web page displays a help feature that shows instructional information on how to place trades correctly, which may be beneficial to new traders.
A handy trade ticket called TradeBar is located at the bottom of the browser window. It is useful for quick order entry. After entering a ticker symbol, the tool is
able to produce a small chart.
Merrill Edge MarketPro®
The broker's most advanced trading system is Merrill Edge MarketPro. Many useful features are available on this platform. There is position and balance information, which is updated in real time. Traders can sign up for alerts and monitor streaming quotes. Users can also access Bank of America's Merrill Lynch Global Research, a security analysis service which covers more than 3,000 stocks. Financial news is also available on the platform.
The software is able to place orders for stocks, options, ETF's, and mutual funds. Charts are interactive and use streaming market information. There are 36 technical analysis studies available.
The broker maintains active trader requirements to use MarketPro. Traders must execute a minimum of 15 trades per quarter, or have at least $50,000 in combined Bank of America and Merrill Edge accounts.
Investors at Merrill Edge can trade using iPhone, iPad, Apple Watch, and Android tablets and phones. The interface is user friendly and easy to learn. There are many useful features. An investment glossary displays detailed entries, such as block trade count, add-on financing, and green shoe. Besides learning important definitions, users can also place trades, pay bills, make a mobile check deposit, and sign up for alerts. The app has financial news articles as well. Unfortunately, there is no streaming business news. In comparison, the Fidelity app has streaming Bloomberg TV free of charge.
Minimal stock research is possible on the app. Reports and ratings from Morningstar are available. A chart can show the price action of an equity from 1-day to max. The display can be shown as mountain, candlesticks, OHLC bars, or a line. Several indicators can be used, such as Bollinger bands, MACD, and slow stochastics.
Merrill Edge Pros
- Free trades if an account meets certain conditions
- Good banking services including a free checking account
- No surcharges on penny stocks, large orders, or extended-hours trading
- No account maintenance or inactivity fees
- Good investment research tools from Morningstar, Bank of America Merrill Lynch, S&P Capital IQ, Thomson Reuters, and Recognia
- Free DRIP (dividend reinvestment; client must call customer support to set it up)
- No-fee IRA accounts
Merrill Edge Cons
- Technical issues (unusable login cards, website going down, etc.)
- High margin rates
- Advanced trading platform, MarketPro, is available to clients with total combined balance of $50,000+, or making 15 trades per quarter
- Mutual funds subject to self-directed short-term redemption fee of $39.95 if held less than 90 days
Merrill Edge is the perfect broker for investors who have $25,000 or more in cash on deposit with Bank of America or Merrill Edge. These customers receive
30 free stock and ETF trades every month just for maintaining that cash position. Clients who use just 5 of those trades per month also get free access to
the broker's advanced trading platform.
Merrill Edge Review Summary
Merrill Edge is a discount brokerage firm created by Merrill Lynch, which is now owned by Bank of America. The company offers self directed
accounts, and charges about an average in the industry rate of $6.95 per trade for stocks and ETFs. Mutual funds are priced at $19.95 per transaction.
Unlike some other online brokers, Merrill Edge does not impose surcharges on large orders, penny stocks, or extended-hours trading. There are no
maintenance or inactivity charges for all accounts. The firm offers free dividend reinvestment program, investment research from six firms, and
easy integration with banking services provided by the parent company.
The one thing that makes Merrill Edge self directed account stand out from the competitors is an offering of 30 free stock or ETF trades per month
for customers who meet any one of the following criteria:
1. Total combined balances of $25,000+ in Bank of America deposit accounts: checking, savings, FDIC-insured CDs or FDIC-insured IRAs.
2. Total combined balances of $25,000+ in CASH balances in Merrill Edge account(s).
Essentially it means that to get free trades a client must keep $25,000 in cash uninvested or earning tiny interest. So the real cost of free trades
to a client is the loss of interest or potential investment gain on $25,000. We also believe that the "free trades" deal is the same marketing trick that
Zecco brokerage used to grow customer base. The firm dumped "free trades" offering once it had
There are a lot of complaints from Merrill Edge's customers on the whole range of issues: trading tools bugs, defective login cards (SafePass cards),
website going down, and order executions.
In conclusion, Merrill Edge is a natural choice for a brokerage for Bank of America customers, especially if they have enough cash available to qualify for free
trades. But even without relationship with a banking giant, Merrill Edge self directed account offers good value for long term and retirement investors. Active
investors and bargain seekers, however, have more appealing options.
Open Merrill Edge Account
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