Merrill Lynch Self Directed Account
The following review applies only to Bank of America Merrill Lynch wealth management account. For Merrill
Lynch self-directed investing account review go to
Merrill Edge Review.
Merrill Lynch Wealth Management
Investors who want some professional help with their finances should take a look at what Merrill Lynch Wealth Management has to offer. Owned by Bank
of America, the full-service brokerage firm provides account management, investment advice, and more. The following article will analyze the specifics
of the broker's offerings and see how they compare to other advisory firms.
Portfolio Management Services
Unlike many on-line brokerage firms where customers manage their own accounts, Merrill Lynch takes on the burden of trading its customers' securities
accounts. In return, the company deducts a fee, based on a percent of assets, from these accounts. One affiliated company is responsible for holding
client assets, and a different affiliated company is responsible for the investment decisions. Having affiliated companies perform both tasks isn't ideal,
although Merrill Lynch is a reputable firm to be sure. It is regulated by FINRA and insured by SIPC.
Merrill Lynch Wealth Management Fees
The following is the broker's schedule for wrap fee accounts:
| 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 manager fee varies based on the portfolio or strategy the customer chooses. For retirement accounts, the style manager fee is waived. In certain
cases, the broker's fees could be reduced by 12b-1 mutual fund fees and other situations. The broker does offer different managed packages to meet
different investment goals. In certain locations or situations, some clients may be able to negotiate lower percent-based fees.
Merrill Lynch bills accounts quarterly. Under the wrap fee program, there are no commissions charged for stock or ETF transactions, nor is there any
annual account fee. The broker charges accounts exchange fees, markups and markdowns on fixed-income transactions, and interest on margin loans and
short sales. The broker also offers financial planning services. The price of this service is not stated in the company's literature, and has to be
negotiated between the firm and the client. Merrill Lynch publishes equity reports and economic commentary. These publications are available free
of charge to the firm's customers.
Merrill Lynch Wealth Management IRAs
The broker offers more than just regular trading accounts. Investors can open several different types of IRA's,
including Roth, Traditional, SEP, SIMPLE, and Rollover. Education savers can also open an ESA or a 529 plan.
UGMA/UTMA accounts are also available with Merrill Lynch.
Financial Advice from Merrill Edge
Investors who need financial assistance but want a cheaper alternative could benefit from Merrill Lynch's subsidiary, Merrill Edge. This on-line discount broker offers managed accounts for a low 1% annual fee. This price includes free commissions. There are licensed Merrill Edge investment advisors located at more than 2,000 Bank of America branches who can help investors construct a Merrill Edge Select Portfolio. The portfolio is reviewed by Merrill Lynch advisors, but only includes ETF's and mutual funds.
Cash Management Features
Merrill Lynch offers a cash management account conveniently named the Cash Management Account.
Deposits are insured up to $250,000 by SIPC. The account comes with bill pay, funds transfer, unlimited check writing, and a Visa
deferred debit card. With this card, the total month's withdrawals are taken out of the account only once per month. The card can be
used to make fee-free withdrawals at Bank of America ATM's. Merrill Lynch also reimburses its clients a maximum of $200 per year for
non-Bank of America ATM withdrawals. The Cash Management Account comes with a rather steep $125 annual fee, and any subaccounts added
to the parent account carry a yearly $25 fee. These charges can be avoided by maintaining at least $250,000 in Merrill Lynch balances.
Customer Service
Merrill Lynch has customer service representatives on the phone 24 hours a day, 7 days a week. They are available to answer financial questions and other account-related issues. The broker can also be contacted through an internal e-mail system after logging into the website.
Comparison
Merrill Lynch's combined wrap fee cost, which could be as much as 3.1%, is quite a bit higher than many of its competitors.
Raymond James, for example, charges 1.0% to 2.25%, plus commissions and an annual
account fee of $50. E*Trade offers managed portfolios of stocks, mutual
funds, and ETF's that cost between 0.95% and 1.25%.
M1 Finance is a great investing service with no commissions or fees.
While Merrill Lynch does have many locations throughout the United States, including some in small towns, there are actually more Merrill Edge locations
inside Bank of America branches. While the Cash Management Account with Merrill Lynch carries the $125 annual fee, a very similar account at Merrill
Edge has no annual fee.
Advisory firm Personal Capital examined data from 155,924 of its users to see how much customers pay in both advisory and mutual
funds/ETFs fees at top 11 full service brokerage houses. The data showed that Merrill Lynch had the highest average expense ratios on ETFs
and mutual funds (0.68%) and the third highest average advisory fee (1.3%) for an average total fee to the client of 1.98%.
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Merrill Lynch Wealth Management Review Recap
A managed account with Merrill Lynch is rather expensive. Investors who feel that the broker offers the highest quality might be comfortable paying the
steep fees. Cost-conscious investors who prefer an advisory relationship can find better values elsewhere, including Bank of America's
cheaper alternative Merrill Edge.
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