Compare Charles Schwab versus Merrill Edge - commissions, fees, trading tools, pros and cons. Which online broker is better?


Two Rivals: Charles Schwab and Merrill Edge

If you have a brokerage account with either Merrill Edge or Charles Schwab, you need to take a look at the investment services of the other. They are closely matched in several areas, and one may be cheaper for you than the other, depending on your circumstances.


Pricing

Merrill Edge Review Charles Schwab Review
Rating 3.5-star brokerage firm rating Charles Schwab rating
Stocks $6.95 $4.95
Options (per contract) $0.75 $0.65
Mutual Funds $19.95 buy and sell $76 buy and $0 sell
Initial Funding Requirement $0 $1,000
Inactivity Fee $0 $0
IRA Annual Fee $0 $0
IRA Termination Fee $50 $0


Education and Research

In our Merrill Edge test account, we found a lot of very useful educational materials. These resources can be found under ‘Guidance & Retirement’ in the top menu. There is a large collection of videos and webinars. They cover topics such as portfolio rebalancing, coping with volatility and risk, bond categories, and tech investing. There are also articles, self-guided course, and calculators that cover a wide variety of topics. We found materials on options, annuities, stocks, and personal finance.

Merrill Edge also provides screeners for all the securities it offers. We especially liked its option strategy builder, which displays a small profit-loss chart with each strategy.

Moving on to Schwab, we find a somewhat less impressive educational section. The broker’s website is a little less user-friendly in this area. Nevertheless, we found materials on how to read option chains, fixed-income pricing, the basics of margin, extended-hours trading, and more.

Like Merrill Edge, Schwab offers good screeners for all the products it offers. Many search criteria can be used, and we were impressed with the number of stock reports available on Schwab’s website. American Electric Power, for example, had reports from seven analysts; while the same stock at Merrill had just three.

Overall, it’s pretty even in this category.


Trading Platforms

The Merrill Edge website has trading capability, and we were very impressed with it. The broker’s trade bar sits at the bottom of the screen and can be hidden or expanded for trading purposes. It is able to submit orders for stocks and ETF’s but not options. A small graph can be displayed on the bar.


Merrill Edge


Although Merrill doesn’t provide a browser platform, it does offer a desktop platform called MarketPro. Merrill requires 5 trades a month or $50,000 in assets to use it. It does provide a lot of great features, such as advanced charting, alerts, watch lists, and streaming quotes.

Schwab offers both desktop and browser platforms. Neither carries any active-trader requirements, and this is a huge advantage over Merrill, especially for small accounts and infrequent traders. Schwab’s desktop system is comparable to MarketPro except that Schwab’s desktop system offers direct-access routing and Level II quotes free of charge.


StreetSmart Edge


Schwab’s browser platform can trade futures and securities. The charting program is very sophisticated with tick-by-tick data and full-screen mode.

Schwab’s website is user-friendly and is sufficient for many trading purposes. Its trade bar doesn’t quite measure up to Merrill’s, though, because orders can’t be placed on it.

Overall, it looks like Schwab is the better pick here.


Mobile Trading

If you don’t have time to trade in front of a computer, both brokerage firms in this survey offer mobile platforms that will allow you to watch financial news, look at market movements, and submit orders.

The Schwab app offers streaming business news courtesy of CNBC. Asian and European versions are sometimes available, too. Other useful features include funds transfer, bill pay, and check deposit.


Merrill Lynch vs Schwab


Schwab’s trade ticket is fairly elementary. It doesn’t offer direct-access routing or complex order types. It does offer limit, market, and stop choices. Charting is a little better, with tools and horizontal mode. Schwab’s app can be used to submit orders for mutual funds and options.

Merrill Edge does a good job of competing against its rival here. We found mobile check deposit, funds transfer, and bill pay. Furthermore, Zelle transfers are possible. As with Schwab, Merrill allows option and mutual fund trading. Merrill’s trade ticket offers more order types than Schwab’s. We found several trailing choices.


Schwab vs Merrill Lynch


As for charting, we thought it was better than Schwab’s program. For example, a chart template can be saved on Merrill’s platform, but not on Schwab’s.

Missing on Merrill’s platform is streaming video news; although we did like the inclusion of free FICO scores.

We’ll call it a tie in this category.


Banking Features

Both brokers offer cash management tools, but there are important differences between them. Schwab has an affiliated bank. So it offers checking and savings accounts to its brokerage customers. Actually, anyone can open a Schwab bank account, but brokerage customers can link a deposit account to a brokerage account. Schwab’s checking account comes with unlimited ATM fee rebates around the world. Schwab is the only bank we know of that offers this generous policy. Checks and the debit card also are free of charge.

Merrill Edge is owned by Bank of America, but for whatever reason, the broker-dealer does not provide checking or savings accounts. What it does do, however, is attach checks and a debit card to a securities account. There are no charges for this service. Furthermore, ATM withdrawals at Bank of America locations are free. If you really want a bank account, a checking or savings account with Bank of America can be linked to a Merrill Edge trading account. But it won’t provide the same global ATM fee rebates that Schwab offers.

Schwab, not Merrill, has the edge in this category.


Customer Support

24/7 customer service is available at both brokerage houses. Schwab has a chat service, and we have always found it up and running no matter the time or day. We did receive a wrong answer, however, in a test chat. Merrill Edge sometimes has a chat service on its website, although it oftentimes is missing. Schwab, but not Merrill, offers Chinese language service.

Both brokers offer great self-service sections on their websites. We found alert settings, message centers, paperless settings, forms, tax centers, and more.

If you would rather skip all the 21st-century channels, Schwab has over 300 brick-and-mortar locations where you can walk in (on a weekday) and get assistance from a human being. Although Bank of America has even more locations than Schwab, none of them are customer service centers for Merrill Edge clients.

Schwab is the victor here.


Mutual and Exchange-traded Funds

After logging into our Schwab trial account, we were able to locate 5,824 products open to new investors. OneSource funds carry no load and no transaction fee. We found 3,405 of them.

Merrill Edge doesn’t quite match Schwab here. Using Merrill’s screener, we found just 3,145 mutual funds, with a measly 755 having neither load nor transaction fee.

As for ETF’s, both brokers offer them. But only Schwab provides a list of commission-free funds. There are more than 250 of them, and several fund families are represented.

Schwab wins again.


Retirement and IRA’s

Individual Retirement Accounts are available at both companies in our survey. Schwab offers Inherited and Custodial accounts in addition to regular Roth and Traditional types. An old plan from a previous employer can be rolled into an IRA as well. Schwab customers can also open estate, trust, charitable, SEP, and SIMPLE accounts. Self-employed 401(k)’s are also on tap.

Merrill Edge clients have access to a lot of the same accounts that Schwab offers. Merrill does not offer the charitable account, however. Furthermore, Merrill charges $49.95 to close a retirement account, whereas Schwab does not.

Schwab seems to be the better choice here.


Merrill Edge vs Charles Schwab Results

There were two ties, and Schwab (review) won all other categories. Schwab is the winner by a comfortable margin. Despite the outcome of this study, Merrill Edge (review) would be a good broker for large accounts that qualify for free trades. Bargain seekers should take a look at Firstrade Review.


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