Bank of America Brokerage Review: Key Points
• Through its subsidiary Merrill Edge, Bank of America offers self-directed and investment-advisory accounts.
• A small list of tradable products can be accessed through a brokerage account with Merrill Edge.
• Merrill Edge has decent, but not great, digital trading tools.
Overview of Brokerage Accounts at Bank of America
Bank of America owns Merrill Lynch, Pierce, Fenner & Smith Incorporated, and through this division, a variety of investment accounts is available. Here’s the rundown on investing services at Merrill.
Investing
Investment-advisory and brokerage accounts are both available through Merrill, which is the company’s full-service firm. Merrill Edge is the company’s online discount firm, and both account modes are available here as well (with the lowest fee schedules and minimums). Merrill Edge offers trading in the following asset classes:
- Stocks (including penny and OTC securities)
- Option contracts
- Mutual funds
- ETFs
- Closed-end funds
- Bonds and fixed income
Merrill Edge’s advisory program only trades ETFs. It is not strictly a robo program, as portfolios are constructed by human advisors, although it is a low-cost firm. Full-service managed accounts are available at Merrill, and here, there are many Wealth Management services, including personalized financial planning from a dedicated advisor.
Both Merrill and Merrill Edge offer a variety of tax shelters to help their clients fend off the Internal Revenue Service. Examples include 529 plans, personal retirement accounts, small-business 401k plans, and custodial accounts.
Banking
Merrill Edge customers can attach checkwriting and a Visa debit card to their brokerage accounts. These cash-management tools don’t create a discrete bank account; they are simply attached to an existing brokerage account. Some tax-advantaged accounts don’t qualify for them.
Brokerage accounts at Merrill Edge and Merrill both participate in the company’s FDIC-sweep program, which automatically moves uninvested cash into Bank of America, where it receives FDIC insurance. Although the FDIC protection is nice, the yields are atrocious right now (just 0.01% for balances under a million dollars).
A variety of money market mutual funds are available at Merrill from families like Fidelity and BlackRock. Some of these products yield more than 5.0% currently.
It’s possible to bypass the hybrid investment-bank setup altogether and go straight to Bank of America and open a checking or savings account. Such a deposit account will automatically be linked to any existing Merrill accounts, and it’s super easy to transfer funds among accounts, including to and from a credit card with Bank of America, which will also be linked on Merrill’s software.
Bbank of America Brokerage Account Fees
Despite the long list of financial services through this very large company, fees and minimums are quite reasonable, at least at the discount firm. Merrill Edge requires no deposit at all to open a brokerage account, and trades on many products will be commission-free.
A managed account opened through Merrill Edge has a $1,000 minimum and costs 0.45% per annum. Adding a financial advisor to the picture increases these requirements to $20,000 and 0.85%.
Numbers at the full-service firm Merrill will be different. Brokerage accounts pay between 5.0% and 0.50%
per transaction for stock trades, depending on the total amount of the transaction. Options and bonds
have similar principal-based costs. Advisory solutions typically cost less than 1.75% of assets and have a variety of minimums, which could be $100,000 for some programs.
The checkbook and Visa card available to Merrill Edge customers are free. The Visa card receives no-fee ATM withdrawals at Bank of America machines (only).
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Margin Service
Margin trading is available in brokerage accounts at Merrill. The downside of this service is that the
pricing schedule is the most complicated in the industry. The cost of borrowing is determined by three
factors:
- A base lending rate, which resets every week
- Debit balance
- Total household assets within the Bank of America family
Website
Brokerage and advisory accounts can easily be managed on the Merrill Edge website. Self-directed tools include charting, security research, and order entry. Under the Research tab in the top menu, there are links to search engines for options, stocks, and funds. The option tools are on a very high level.
Then there is MarketPro. This is Merrill Edge’s advanced web-browser platform that manages to deliver a great deal of helpful resources. Examples include Level II quotes, fundamental analysis, OptionsPlay (a very good derivative platform), prices on forex pairs (these are not tradable), an economic calendar, and more.
The order tickets on the website and MarketPro are the same. Available trade types include stop and trailing.
Mobile App
Merrill Edge hasn’t forgotten about the needs of mobile customers, which is why it has rolled out a user-friendly mobile app with the same order ticket on the computer platforms. Options and mutual funds have their own tickets. Charting, however, is on a much lower level with no tools and only line as the graph style. And there’s no video news.
On the upside, there is a great deal of research on the app. These materials will be found, conveniently enough, under the Research tab in the bottom menu. During our probing, we found news articles, analyst reports from CFRA and Morningstar, and trade stats like dividend yield and average volume. There is also a glossary that would be valuable to newbies. Mobile check deposit is icing on the cake.
Other Software
Merrill Edge does not have an app for Apple Watch or a desktop platform. Its mobile app does work on tablets, which is one highlight.
Further Services
Extended-hours Trading: Pre-market and after-hours trading are both available at Merrill Edge.
Fractional Shares: Missing in action.
IRA Service: Merrill Edge has Individual Retirement Accounts (with a $49.95 termination fee).
Dividend Reinvestment Plan: Available free of charge.
Stock-Lending Income Program: Not available.
IPO Access: Merrill Edge does not offer Initial Public Offerings.
Recurring Mutual Fund Purchases: Possible.
Our Recommendations
Long-Term Investors & Retirement Savers: A tax-deferred account with Merrill or Merrill Edge combined
with the company’s educational materials would be a good long-term path.
Stock and ETF Trading: A brokerage account with Merrill Edge combined with MarketPro would be a
low-cost strategy, thinkorswim
is a better platform.
Small Accounts: A self-directed (non-IRA) account with Merrill Edge will work.
Beginning Investors: A managed account with Merrill or a better priced personal advisor.
Mutual Funds: With the Merrill Edge fund screener, we found 2,619 funds. At
Charles Schwab, we found 6,157.
We would go with Charles Schwab.
Bank of America Brokerage Review Verdict
Bank of America offers some decent, but not spectacular, investing services through its subsidiary Merrill.
Updated on 10/29/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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