Overview of Merrill Edge and Merrill Lynch
Both Merrill Edge and Merrill Lynch are owned by Bank of America, and both brokers provide investment services. Merrill Lynch was founded as an independent company in the early 1900’s. It was acquired by Bank of America in 2008. In 2010, the combined company launched Merrill Edge as a low-cost discount broker, with Merrill Lynch catering to wealthier clients. There are other differences, too. Let’s take a look at them.
Geographic Markets
Merrill Lynch is a global company with operations all around the world. Besides its locations in the United States and Canada, it has offices in Hong Kong, Australia, the Cayman Islands, France, China, Germany, India, Japan, Israel, Malaysia, Korea, Saudi Arabia, Russia, and many other regions. Countries that don’t have a Merrill Lynch office are usually served by a location in a nearby area. Brazil, for example, is served by the company’s Miami office.
Merrill Edge is strictly for U.S. clients. An account can only be opened by persons residing in the United states. Despite its on-line focus, the discount broker does have financial advisors located in many Bank of America branches. Merrill Lynch operates its own independent branch network.
Security Research
Merrill Lynch publishes a great deal of security research, whereas Merrill Edge does not. Nevertheless, many of Merrill Lynch’s materials can be accessed by Merrill Edge customers. The Merrill Edge site hosts pdf reports from Merrill Lynch on important economic issues. These documents can be downloaded free of charge. Merrill Lynch also provides stock reports on many popular companies. They include buy, hold, and sell recommendations. They can also be downloaded by Merrill Edge traders.
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Private Banking & Investment Group
Merrill Lynch has a division called the Private Banking and Investment Group. This department serves high net worth (HNW) individuals and their families. Available services include estate planning, advice on executive compensation, insurance, philanthropy, and global investments. This Merrill Lynch section also helps businesses with financing, expansion, IPO’s, and mergers and acquisitions. Merrill Edge generally does not work with HNW clients.
Merrill Edge vs Merrill Lynch: Pricing
Fees and commissions vary widely between the two companies. Merrill Lynch does not offer self-directed accounts, so its pricing schedule is for managed account services. Merrill Edge, on the other hand, offers both self-directed and low-cost managed accounts.
For self-directed accounts, Merrill Edge charges $6.95 for stock and ETF trades. There are no-load, no-transaction-fee mutual funds available with the broker. Funds that carry a transaction fee cost $19.95 on both the buy and sell sides. Fixed-income products are priced on a markup and markdown basis. A Merrill Edge brokerage account comes with no annual fee. There are also no fees for maintenance, inactivity, or a low-balance.
For managed accounts, Merrill Edge has a low-cost package called Guided Investing. It costs 0.45% annually and requires just $5,000 to start. This package buys and sells low-cost ETF’s. A more expensive option is Select Portfolios, which costs 85 basis points every year and has a $20,000 account minimum. This plan comes with professional financial guidance from a Merrill Edge Financial Solutions Advisor at a Bank of America location. Select Portfolios also invests in other securities besides ETF’s.
Merrill Lynch’s pricing schedule is less transparent than Merrill Edge’s, in part because the former’s costs are negotiable. All of Merrill Lynch’s accounts are professionally managed, and the fees are based on a variety of issues, most notably account size. Clients who select the company’s wrap fee account pay no commissions for ETF or stock trades. There is also no account fee. Like Merrill Edge, bonds are priced on a markup or markdown basis, and interest is charged on margin. The rates on these services, however, could be different from what Merrill Edge charges.
Merrill Lynch’s asset-based management fee schedule is a tiered system with larger accounts getting lower rates:
| Account Balance | Merrill Lynch Fee | Style Manager Fee |
|---|
| Under $1 million | 2.70% | 0.14% to 0.40% |
| $1 million – $2 million | 2.15% | 0.14% to 0.40% |
| $2 million – $5 million | 1.80% | 0.14% to 0.40% |
| $5 million – $25 million | 1.50% | 0.14% to 0.40% |
| Over $25 million | Negotiated | 0.14% to 0.40% |
The style manage fee exists because different investment strategies and products will have different prices. Obviously, Merrill Lynch’s pricing schedule is much higher than Merrill Edge’s. Keep in mind, however, that an account that trades a lot of stocks would save money on zero commissions.
The third job of a transfer agent is to manage destroyed, stolen, or lost security certificates. For example, a “stop transfer” can be initiated to prevent ownership of a security being changed from one name to another if a stock or bond is lost.
Institutional Investors
Merrill Lynch clients typically are large institutions and wealthy clients who can benefit from the company’s tiered pricing structure. The schedule listed above is negotiable at all levels and could be slightly different in different geographic regions. The broker-dealer will sit down with each client and negotiate an exact fee based on the securities to be traded, the assets to be deposited, and the investment style desired.
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Trading Tools
Because Merrill Edge has a mostly self-directed focus, the broker has good trading tools on its website. These include a handy trade bar at the bottom of the browsing window that can quickly and easily place orders for stocks, ETF’s, and options. The website itself has trading forms, and advanced charting is available with technical indicators and comparisons. A more sophisticated desktop platform is available to active traders.
Merrill Edge vs Merrill Lynch: Recommendation
Merrill Edge (learn more) obviously would be a better choice for investors who don’t need much guidance.
The broker also offers 30 free equity trades per month to Bank of America customers who have at least $25,000 on deposit with the bank. So investors who meet this
requirement and plan to trade stocks would do especially well with the discount firm.
Large institutions, like endowments or pension funds, should go with Merrill Lynch (learn more).
The company has advisors with a lot of experience helping these types of clients with a wide range of financial issues.
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