Merrill Edge vs. E*Trade Introduction
Are you looking for a broker with advanced software and ultra-low fees? Look no further than E*Trade
and Merrill Edge. These two are fantastic values. Before choosing one over the other, be sure to look
over the following comparison:
Cost
|
|
|
| Rating |
|
|
| Stocks, ETFs |
$0 |
$0 |
| Options (per contract) |
$0.65 |
$0.65 |
| Mutual Funds |
$20 |
$0 |
| Initial Funding Requirement |
$0 |
$0 |
| Inactivity Fee |
$0 |
$0 |
| IRA Annual Fee |
$0 |
$0 |
| IRA Termination Fee |
$0 |
$0 |
| Outgoing Wire Fees (Domestic) | $24.95 | $25 |
| Full Account Transfer Out | $49.95 | $75 |
| Partial Account Transfer Out | $0 | $25 |
Self-Directed Trading
In self-directed accounts, Merrill Edge offers these investment vehicles:
- Options
- Stocks
- Bonds
- Funds (mutual, exchange-traded, and closed-end)
E*Trade has the same list but adds futures and options on futures.
OTC securities are available at both firms. E*Trade has a $6.95 commission on over-the-counter trades. Merrill Edge does not.
Winner: Draw
Portfolio Management
Besides self-directed investing, both brokerage firms also offer managed accounts. Only E*Trade has a robo service. The cost is 0.30% per annum. Although Merrill Edge doesn’t have automated management, it does have online human management. The cost of this program is 0.45%.
And Merrill Edge has something E*Trade doesn’t: low-cost online management with a dedicated human investment advisor. The cost is 0.85%.
For investors who need the highest level of advice and service, both brokerage houses also offer old-school management. Merrill Edge has its advisors scattered through many Bank of America locations. E*Trade, by comparison, only has a few brick-and-mortar centers throughout the United States, so most wealth management customers will work with an advisor online or over the phone.
With either broker’s traditional service, fees and minimums vary.
Winner: Pretty close overall
Websites
Self-directed and managed accounts can be accessed on both firms’ websites. During our examination, we found both sites to be very effective for account management, security research, and order entry.
E*Trade’s website offers 7 trade types. Stop limit on quote is one of them. Charts have comparisons, company events, and 7 plot styles. While these tools will suffice for most traders, a more advanced experience will be found on Power, the company’s browser platform. The software has 10 trade types, including some not found on the website proper. Charts have about 30 drawing tools, which won’t be found on the website’s charts.
Merrill Edge’s website has decent charting, although drawing tools are absent. It more than makes up for this absence on MarketPro, its browser-based platform. We found over 20 drawing tools on it.
The trade ticket on MarketPro is the same ticket on the website. There are 8 trade types, including stop quote limit and 4 trailing orders. There are only 2 duration choices, though: GTC and day.
Winner: E*Trade
Other Software
In addition to website trading, both companies have mobile apps with lots of trading muscle. E*Trade actually has two apps. One is based on the Power platform we have already looked at. The other app is good for account management, transferring funds, and the like. Both apps have good charting software. The Power app can trade futures contracts.
Merrill Edge has just one app, but it does have some good tools. Mobile check deposit and bill pay are examples. There are also some good research materials, like Morningstar articles and security analysis reports from Bank of America Global Research.
Although we do like the Merrill Edge app, the brokerage firm fails to deliver any type of desktop trading. E*Trade does. Called Pro, the platform offers a high-level trading experience with Level II quotes, full-screen charting, and much more.
Winner: E*Trade
Margin Services
Both broker-dealers in this contest have margin and cash accounts. A cash account can upgrade to margin status on either website. Only E*Trade offers portfolio margin for large accounts.
As for pricing, E*Trade charges anywhere between 13.2% and 11.2% for margin debits, depending on the loan amount. Merrill Edge no longer publishes its rates online. Instead, it says on its website that “rates are determined by a few factors, including the base lending rate (which resets weekly), your debit balance and your overall relationship with Bank of America® and Merrill®.” Sounds like large accounts will get the best deals.
E*Trade has a very thorough margin section on its website that includes the following margin resources:
- Margin Analyzer Tool
- Margin Calculator Tool
- Requirements search
- Risk Slide Tool
Merrill Edge’s website has no such resources.
Winner: E*Trade
Other Services
Initial Public Offerings: IPO trading is available with an E*Trade account but not a Merrill Edge account.
Banking Tools: At Merrill Edge, it’s possible to add a debit card and a checkbook to a brokerage account. It’s also possible to link a checking or savings account from Bank of America. E*Trade only offers linked bank accounts.
Individual Retirement Accounts: IRAs are available at both brokerage houses. E*Trade charges $25 for early withdrawals, and Merrill Edge charges $49.95 to close an IRA.
Extended Hours Trading: Merrill Edge’s pre-market trading begins at 7:30 am, EST. E*Trade’s early-bird session begins at 7:00 am. Both firms end at 8:00 pm. Only E*Trade delivers 24/5 trading in a selection of ETFs.
DRIP Service: On tap at both firms.
Fractional Shares: Not available at either firm (for stocks and ETFs).
Periodic Mutual Fund Investing: E*Trade and Merrill Edge customers can set up automatic mutual fund purchases.
Winner: Slight advantage to E*Trade
Recommendations
ETF/Stock Trading: We lean towards E*Trade with Power or Pro.
Beginners: A managed account with either firm is a great way to start.
Long-Term Investors & Retirement Savers: E*Trade has more target-date mutual funds (222 versus 86). And only E*Trade offers self-employed 401k plans without any fees. It is also the only broker in this survey to have the Roth version of the 401k. But Merrill Edge would be good for wealth management customers due to the broker’s link to Bank of America’s branch network.
Mutual Fund Trading: E*Trade has more than 6,000 funds. Merrill Edge has less than 3,000. Easy choice.
Small Accounts: Merrill’s investment-advisory service has a $1,000 minimum starting balance.
E*Trade’s robo program requires $500. Neither firm has any minimums or ongoing fees for self-directed taxable accounts.
Merrill Lynch vs E*Trade: Verdict
Although Merrill Edge brings a lot to the table, E*Trade is the clear winner in this survey.
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Updated on 1/1/2025.
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