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Merrill Lynch vs. Charles Schwab


Opening an investment account can be a daunting task. Researching fee structures, account types and product features take time and can be perplexing. Plus, with so many companies offering investment services, it can be tough to know if you’re making a wise decision. Fortunately, this guide breaks down two major investment companies: Merrill Lynch and Charles Schwab. If you’re hoping for help in automating your investments, you may want to work with a financial advisor instead.

Overview of Merrill Lynch vs. Charles Schwab

Merrill Lynch and Charles Schwab are giant financial companies offering clients investment services. Each has different features and advantages, so your financial circumstances will determine which one’s services are best for you.

Schwab, also known as Charles Schwab, unites a range of financial services under one roof. It has no trade or account minimums for its investment funds. Plus, Schwab clients can invest in actively and passively managed funds. In addition, investors can use a hi-tech robo-advisor tool to automate their investments.

Schwab recently acquired TD Ameritrade, enhancing its services for clients wanting to trade international currencies. By 2023, it will fully assimilate TD Ameritrade’s functions into its platform. Schwab currently manages about $8 trillion in customer assets.

Merrill Lynch is an investing service operating under Bank of America’s ownership. It offers three investment services: Merrill Edge® Self-Directed, Merrill Guided Investing and Merrill Lynch Wealth Management. Each service has incrementally higher fees and investment minimums and more sophisticated investing tools. It currently manages about $2.75 trillion in assets.

Merrill Lynch vs. Charles Schwab: Fees

One of the ways major brokerage platforms compete is by lowering fees. Merrill Lynch and Schwab are no exception. Here is a breakdown of the major fees for both investment platforms so that you can compare the aspect of the tool you want to use the most.

Charles Schwab Fees

Schwab takes no commissions for online stock, exchange-traded funds (ETFs) and option transactions. Plus, it charges nothing for trading mutual funds or bonds. However, it charges $0.65 per options contract and $2.25 per futures contract. Broker-assisted trades cost $25 and contacting customer service is free.

In addition, investors with less cash can purchase partial shares of stock indexes for $5 apiece. Investors transferring assets out of their accounts will pay $15 to $25. Schwab’s robo-advisor accounts have a $5,000 minimum with no fees. Investors with $25,000 can open an Intelligent Portfolio Premium account for $300 plus a $30 monthly advisory fee. This account blends robo-advising and certified financial planner services.

Schwab’s margin rates range from 10.575% for loans under $25,000 to 8.825% for loans of $250,000 to $499,999. Merrill Lynch does not publicize specific margin rates, requiring customers to inquire about current rates. They base your margin rate on your debt load, the base lending rate and your assets with Merrill Lynch and Bank of America.

Merrill Lynch Fees

Merrill Edge® Self-Directed is Merrill Lynch’s basic investing account. It charges no commissions for online stock, ETFs and options trades. No minimum is necessary to get started. Options trades have a $0.65 contract fee and asset sales incur fees of $0.01 to $0.03 per $1,000 of assets. Typically, broker-assisted trades cost $19.95 to $39.95, depending on the asset type. Various fees apply to clients holding ETFs. Contacting customer service is free.

Merrill Guided Investing is for investors able to meet a higher minimum requirement. Guided Investing clients can open an account if they have $1,000 to invest. They will experience annual fees of 0.45% of assets managed plus the fees mentioned above. Investors with $20,000 can access a Guided Investing account with personal financial advisory services and will pay fees of 0.85% of assets managed plus the fees mentioned above.

Lastly, Merrill Lynch offers their Wealth Management account for clients with $250,000 or more. Wealth Management customers can access a group of advisors to create a thorough financial plan. Because the assets managed are so substantial, fees vary based on client needs.

Merrill Lynch vs. Charles Schwab: Services and Features

SmartAsset: Merrill Lynch vs. Charles Schwab

Both companies offer a range of services, including individual and joint brokerage accounts, 401(k)s, individual retirement accounts (IRAs), 529 college saving plans and custodial accounts. Additionally, both companies offer banking services, as Bank of America owns and operates Merrill Lynch, while Schwab banking in its suite of products.

Charles Schwab Services and Features

Clients looking for a robo-advisor can use Schwab’s Intelligent Portfolios®, which provide automated investing services and tax-loss harvesting. Also, if you have at least $25,000 to invest, you can access the Intelligent Portfolio Premium service to receive help from a certified financial planner.

For client education, Schwab has a daily Q&A stream Monday through Friday for all investing topics. The company aims to present first-rate research to its customers. It has a library of free financial education resources as well. Plus, clients can speak with an investment professional 24 hours a day, every day of the year via phone.

Merrill Lynch Services and Features

Merrill Lynch has human financial advisors that directly interact with clients for a fee. While they don’t offer robo-advised investment accounts, they offer hybrid accounts that blend automated investing tools and oversight from investment professionals. However, these features don’t apply to the Merrill Edge® Self-Directed account, a no-frills investment tool that places control in the client’s hands.

Merrill Guided Investing clients may receive fee reductions for Bank of America Preferred Rewards bank accounts. In addition, they’ll receive guidance for financial planning and investment strategy. Merrill Lynch customers cannot trade cryptocurrency or access the foreign currencies marketplace. Additionally, its customers can’t access fractional shares.

All Merrill Lynch customers can access investment education videos and resources for free. Their resources cater to all knowledge levels and cover expansive topics. Finally, Merrill Lynch’s customer service is available Monday through Friday, 9 a.m. to 9 p.m. Eastern Standard Time.

Merrill Lynch vs. Schwab: Online and Mobile Experience

Both companies’ apps have favorable ratings, but customer feedback contains numerous complaints. Schwab sometimes can overwhelm the average user with data. However, it offers an intuitive interface on mobile and desktop.

That said, active traders will probably like the Schwab Street Smart desktop version because the mobile version lacks certain features. Schwab Mobile has a 4.8-star rating on the Apple store and 3.7 stars on Google Play. On the other hand, Schwab’s Street Smart mobile app has 1.5 stars on the Apple Store and 2.2 stars on Google Play.

Merrill Lynch has two mobile apps as well: the Merrill Edge app for Edge clients and MyMerrill for Guided Investing and Wealth Management members. Edge app users praise its ease of use and availability of investment research. It holds a 4.6-star rating on the Apple store and 4 stars on Google Play.

MyMerrill users give similar feedback and emphasize its streamlined nature, especially for Bank of America customers. The app has a 4.7-star rating on the Apple Store and 4 stars on Google Play.

Who Should Use Which Investment Platform?

Merrill Lynch and Schwab both offer low-fee, accessible investment options for investors. As a result, novice investors prioritizing inexpensive investing could be satisfied by opening an account with either company.

However, the companies diverge from that point. Investors who want to use a robo-advisor are more likely to go with Schwab, as Merrill Lynch does not offer a pure robo-advisor option. Additionally, investors who want to dive deep into the data may prefer Schwab, which provides additional investing tools and analysis through its Street Smart platform.

On the other hand, wealthier investors who prefer white-glove treatment may be drawn to Merrill Lynch’s services. Its Guided Investing and Wealth Management products provide a dedicated financial advisor who can help you create a financial plan and invest accordingly.

Bottom Line

SmartAsset: Merrill Lynch vs. Charles Schwab

Merrill Lynch and Schwab are significant players in the individual investing market. Both firms offer robust services, from bank accounts and IRAs to college funds, and charge minimal fees. In addition, their mobile apps are generally easy to use. Investing with either company will help you make gains without suffering large fees. That said, investors with more money may receive more individualized services from Merrill Lynch, while investors who want to use market research or robo-advisors might prefer Schwab.

Investing Tips

  • Want financial advice without being tied to an enormous company? An independent financial advisor can provide guidance and help with investing. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goalsget started now.
  • Investing for retirement is essential. However, you have numerous options for investment accounts. If you’re not sure about retirement accounts, use this guide to determine which type of retirement account you should open.

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