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Vanguard vs. Merrill logos

Merrill Edge vs. Vanguard

moneywise / Vanguard/Merrill

🗓️

Updated: August 13, 2021

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If you’re looking to invest online, two popular options to consider are Merrill Edge and Vanguard. Both come from legendary Wall Street brands, but each of these online brokerages caters to a different type of investor. Keep reading to learn more about Merrill Edge vs Vanguard and if either is the best choice for your investment goals.

Quick overview of Merrill Edge and Vanguard

Merrill Edge is the online trading brand from Merrill Lynch, which is part of Bank of America. Vanguard is perhaps best known for its well-respected family of low-fee mutual funds, but it offers full brokerage services as well. Here’s a snapshot of what you can expect when comparing Merrill Edge vs. Vanguard:

Highlights
Rating
8/10
9/10
Founded 
1914 (Merrill Lynch) 1998 (Bank of America)
1975
Total customers
3 million
30 million
Total customer assets
$306 billion
$6.2 trillion
Minimum opening deposit
$0
$3,000 for most Vanguard mutual funds or the price of one share of an ETF
Recurring account fees
None
$20 or $25 (Can be avoided with electronic statements or $50,000 account balance)

Merrill Edge

Merrill Edge is the discount brokerage arm of Bank of America’s Merrill Lynch subsidiary. Merrill Edge offers three main products that could be a fit, depending on your needs. Merrill Edge Self-Direct accounts have no minimum balance and $0 stock and exchange-traded funds (ETF) trades. If you want help managing your investments, there are paid options available with minimum balances starting at $5,000.

Merrill Edge is best for dedicated Bank of America customers with a strong relationship across its investment and banking products, as there are valuable loyalty rewards available through the Bank of America Preferred Rewards program to customers with combined account balances of at least $20,000, $50,000 or $100,000.

Merrill Edge review

Vanguard

Vanguard grew from roots as a mutual fund management company to become one of the world’s largest investment companies. You can buy and sell stocks, ETFs, and other assets with no commissions, but the biggest reason to pick Vanguard is for Vanguard’s mutual funds and ETFs.

Vanguard was the pioneer of index funds when everyone else was still into actively managed funds. Vanguard is one of the industry leaders in terms of fund pricing, with an average 0.06% expense ratio for ETFs and 0.10% for mutual funds. As long as you have enough in your account to avoid annual fees, Vanguard remains a leading choice for retirement and other long-term investment goals.

Shopping for a brokerage? Check out the best online brokerage firms.

Vanguard review

Unique features

When comparing Merrill Edge vs. Vanguard, each broker has unique features that stand out as valuable to different investors.

Merrill Edge unique features

  • Tools for Active Trading and Investing — At Merrill Edge, you will find better tools for active trading and investing. Whether you’re looking to build your own retirement portfolio of ETFs or want to get in on the action of riskier options trading, Merrill Edge can easily meet your needs. It is the better choice for do-it-yourself investors who want to pick and manage their entire portfolio.
  • As your wealth grows, Merrill Lynch investment services may also become an attractive option. While you probably won’t want to spend much on investment advising with a smaller portfolio, those with significant assets can find full-service investment management through Merrill.
  • Bank of America Preferred Rewards — If you already bank with Bank of America or use its credit cards, you’ll want to pay attention to this part. Merrill Edge is part of Bank of America Preferred Rewards. As your balance grows to reach the Gold, Platinum, or Platinum Honors tiers, you can qualify for discounted investment management fees, better savings interest rates, boosted credit card rewards, free ATM withdrawals, and other perks.
  • No Fees — Merrill isn’t historically known for low costs, but it joined the wave of brokerage firms that have dropped fees for stock investing and ETF trades, and options base trade fees to zero. With that pricing and no minimums or recurring fees, it could be a good choice for many investors and traders.

Vanguard unique features

  • Mutual Funds With No Transaction Fees — Vanguard is a top choice for those looking to access the company's excellent mutual funds with no transaction fees. With a Vanguard brokerage account, you can buy and sell mutual funds with no added charges. Other brokerages typically charge around $10 to $50 for Vanguard mutual fund trades.
  • Impressive List of Passive Index Funds and Actively Managed Funds — Vanguard offers an impressive list of passive index funds and actively managed funds. Vanguard mutual funds typically have a minimum investment requirement of $1,000 to $10,000, depending on the fund. If you have enough, consider the higher-end Admiral Shares funds with lower expense ratios. You can buy Vanguard ETFs at most major brokerages with no commissions; some even support fractional shares for Vanguard ETFs.
  • No Trading Commissions — Vanguard also joined the herd with no trading commissions, but it does have certain account minimums that make it less desirable for those with smaller account balances.

How are Vanguard and Merrill Edge similar?

  • Both Vanguard and Merrill Edge offer online self-service brokerage accounts and managed investment accounts where you work with a professional advisor.
  • Both Merrill Edge and Vanguard offer tools that allow you to manage or view your portfolio of stocks, ETFs, mutual funds, fixed-income investments, and more. You can trust that your funds are well-secured in both cases, as both brokerages have strong reputations for security. You’ll get SIPC insurance with both, as well as accounts that are regulated by the SIPC and FINRA.
  • Merrill Edge puts a flashier wrapper on its website than Vanguard, but both do essentially the same thing: allow you to invest across a wide range of assets for a low cost.
  • Both of these brands offer features that appeal more to investors with larger portfolios. If you are brand new to investing, don’t have a big starting nest egg, and don’t have a relationship with either of these brokerages, you may want to choose a brokerage that better fits your needs as a new investor.

Merrill Edge vs. Vanguard: how are they different?

We’ve already taken a look at the highlights Merrill Edge and Vanguard have to offer. To get a better idea of which makes more sense for you, here’s a more detailed look at the differences.

  • Merrill Edge is part of a multinational bank. With Merrill Edge and Bank of America, you can viably manage and house all of your finances under one roof. If you prefer the one-stop shop for your finances and a bank that rewards loyal customers, Bank of America could be a good choice.
  • Vanguard is stronger for those who want to put their money in a narrower group of funds with a more hands-off approach. Vanguard is popular with retirement investors for its low fee index strategy. You may run into recurring fees at Vanguard, where you won’t pay for the basic brokerage account at Merrill Edge. But if you have enough to meet the minimums or opt for electronic statements, those fees are easily avoided.

Pricing and fees

Both Merrill Edge and Vanguard offer $0 stock and ETF trades. Here’s a look at the full commission schedule for the most popular investment products:

Self-directed trading

Stock/ETF
$0
$0
Options
$0 + $0.65 per contract
$0 + $1 per contract
Mutual funds
$0 transaction fee funds available
$0 for Vanguard funds
$19.95 for others
$20 for others
Representative Assisted Trade
$29.95
$25

Managed portfolios

Merrill Edge Guided Investing is available to those with a $5,000 minimum balance for a 0.45% annual fee. Merrill Guided Investing with an advisor is available with at least $20,000 for a 0.85% annual fee. In both cases, Bank of America Preferred Rewards discounts may be available.

Vanguard Digital Advisor charges 0.15% of the assets in your managed portfolio. You’ll need $3,000 invested in a specific Vanguard fund with no other holdings to enroll the account. With at least $50,000, you can join Vanguard Personal Advisor Services, which charges a 0.30% annual fee.

Customer service

Both Vanguard and Merrill Edge self-directed accounts are mostly for DIY investors who don’t mind reading help documentation and can handle most basic needs independently. However, when you do need help, you'll have someone to talk to.

Among all major self-directed investor accounts, Vanguard ranked at the very top where Merrill Edge came in the last place for customer satisfaction in a J.D. Power 2020 annual study. Vanguard isn’t ranked in the full-service category, while Merrill comes in a bit below average.

Both are reputable firms, but Vanguard has a better reputation for customer service than Merrill Edge.

Security

For security, you shouldn’t worry too much with either Vanguard or Merrill Edge. Both companies employ top-tier security to keep digital bad guys out of your accounts. Also, your accounts are insured by the SIPC up to eligible limits.

To keep your accounts secure, the most important thing to worry about is choosing a secure, unique password that isn’t used for any other account. Turn on multifactor authentication to further secure any financial accounts.

Who are they best for?

If you’re still debating which makes more sense, Merrill Edge or Vanguard, here’s a snapshot of who each is best for:

Merrill Edge is best for:

  • Investors who want to manage their own investment account.
  • Want low-cost access to a wide set of investable assets.
  • It’s also best for those who have a strong relationship with Bank of America.
  • It’s also a better choice for new investors with smaller portfolios.

Vanguard is best for those who:

  • Want to invest primarily in Vanguard mutual funds and avoid the big fees charged by many other fund families.
  • It’s a good choice for those who want to take a mostly passive investment strategy, with or without the added advice of a digital or human portfolio advisor.
  • Due to minimums, it’s best for those with a five-figure investment portfolio or larger.

Alternatives to Merrill Edge and Vanguard

Rating
4.8/5
4.5/5
3.5/5
Minimum Investment
$0
$0
$0
Stock Trades
$0/trade
$0/trade
$0/trade
Options Trades
$0.65/contract
$0.50/contract
N/A
Crypto Trades
Mutual Funds
Virtual Trading

Which is the best?

If we have to pick between Merrill Edge and Vanguard, there is no clear winner. It truly comes down to what you prefer in a brokerage, how you plan to invest, your current assets and how much help you want to manage your portfolio.

Both Vanguard and Merrill Edge are excellent brokerages. Digging into the details and understanding your investment goals will help you choose the right option for you.

About our author

Eric Rosenberg
Eric Rosenberg, Freelance Contributor

Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time. He has in-depth experience writing about banking, credit cards, investing and other financial topics and is an avid travel hacker. When away from the keyboard, Eric enjoys exploring the world, flying small airplanes, discovering new craft beers and spending time with his wife and little girls.

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