E*Trade versus Merrill Edge - compare IRA, commissions, investing fees, trading tools, account differences, pros and cons. Which online broker is better?

Overview of Merrill Edge and E*Trade

Merrill Edge and E*Trade are closely matched in many important categories. This investigation will compare and contrast the two brokerage firms and then make some recommendations for you based on our research.


Merrill Edge Review Etrade Review
Rating 3.5-star brokerage firm rating Etrade brokerage firm rating
Stocks, ETFs $0 $0
Options (per contract) $0.65 $0.65
Mutual Funds $19.95 $19.95
Initial Funding Requirement $0 $500
Inactivity Fee $0 $0
IRA Annual Fee $49.95 $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
Open an account Up to $600 when you open a Merrill Edge account with at least $20K. No commissions on stocks and ETFs.

As you see from the table above, Robinhood and E*Trade are similarly priced.

What Types of Investments and Accounts Are Available?

Using our Merrill Edge account, we located ETF’s, bonds, equities, derivatives, certificates of deposit, and mutual funds. The brokerage house offers a range of account types to trade these instruments. For example, there are IRA’s, solo 401(k)’s, annuities, 529 plans, and UGMA/UTMA options.

Moving to E*Trade, we found all of the investment vehicles available at Merrill, plus futures contracts. E*Trade also does a good job of offering IPO’s to its customers. The broker’s website has a regular IPO center, something Merrill doesn’t offer.

Investment products at E*Trade can be traded in a variety of accounts. The broker offers custodial accounts, IRA’s, Coverdell savings arrangements, and individual 401(k) plans.

What About Managed Accounts?

Both brokerage firms offer portfolio management services for an additional fee. E*Trade provides several options to choose from. The first one is a robo service. It trades exchange-traded funds that have low expense ratios. The price is 30 basis points per annum, and the first year is free. There is a $5,000 minimum investment deposit requirement with this plan.

The other packages available at E*Trade are traditional management services. While the prices are higher (65 to 125 basis points) and the minimums steeper ($25,000 or higher), in return you get a one-on-one relationship with a human advisor. These packages also come with a wider selection of investment vehicles.

If you want a computer program to make trading decisions in your account, then you’ll have to go with E*Trade. Merrill Edge does not offer this service (at least not yet). It does offer a traditionally-managed option that costs 0.45%, a bargain for that type of service. And there is only a $5,000 minimum investment amount.

This is the low-cost package. Merrill offers more expensive options that provide a lot more. A plan that costs 0.85% with a $20,000 minimum will get you oversight from Merrill Lynch investment advisors and personal meetings with a Merrill Edge financial planner for periodic portfolio reviews.

Which Broker Is Better for Mutual Funds and ETF’s?

If you’re going to try to trade on your own, you can find good selections of mutual and exchange-traded funds at both companies. We were able to find approximately 8,500 mutual funds on E*Trade’s website. Slightly less than 4,300 of these have no transaction fee and no load.

Merrill Edge doesn’t quite measure up here. With its mutual fund screener we found just 3,200 securities that were open to new investors. Less than a thousand on this list have no transaction fee and no load.

As for fund resources, both broker-dealers are really fantastic. Screeners are easy to use with lots of search criteria. Fund profile pages include plenty of helpful information, and fund centers on the brokers’ websites offer a large amount of useful data.

We also like the two lists from both brokers (Select Funds from Merrill and All-Star Funds from E*Trade). They are collections of funds developed by investment advisors that are expected to deliver high risk-adjusted returns.

Do They Offer Cash Management Tools?

Brokerage customers nowadays have come to expect banking features with their investment accounts. Merrill Edge has responded by offering checks and a debit card, and there is no charge for them. A separate account is not created; the checks and debit card are simply attached to an existing brokerage account. ATM withdrawals at Bank of America machines are free.

E*Trade operates an FDIC-insured bank. As such, it offers checking and savings accounts that can be linked to a trading account. One of its checking accounts offers ATM fee reimbursements, but requires a $5,000 balance every month to avoid a $15 fee. There is a $100 minimum to open the account. If you don’t need the ATM withdrawals and want to earn some interest, E*Trade’s savings account pays over 2% annual interest.

What Software Do the Two Firms Have?

When you’re ready to place a trade, you’ll definitely want user-friendly software. Both brokers succeed easily in this category. We were able to submit orders on Merrill Edge’s trade bar, which sits at the bottom of the site. Trialing orders are available, but it can’t trade options.

The website is sufficient for most trading needs. While charting is rather simple on it, much better charting is available on the broker’s desktop platform. It’s available to customers who meet minimum trade requirements. It offers the company’s best trading tools.

Merrill Edge

One tool that Merrill doesn’t have that E*Trade does is a browser platform. Called Power E*Trade, this software comes with some really useful features. First up is Bloomberg Business News, which streams in HD free of charge. Then there are option chains, and because the Power platform is left over from OptionsHouse, it offers lots of multi-leg orders. And we really liked the economic calendar during our research. We were able to see upcoming conference calls and dividends.

E*Trade’s desktop system is comparable to Merrill’s. There are many nice features, such as Level II quotes, market news, and option tools. Missing at E*Trade is a website trade bar.

Etrade Pro

Do They Offer Mobile Apps?

If you are too busy to trade at home on a PC, be sure to download Merrill’s or E*Trade’s app on your smartphone or tablet. E*Trade actually offers two apps, one of which is a Power app modeled after the browser system. Combined, E*Trade’s features include Level II quotes (unusual for a mobile platform), complex option strategies, and futures trading.

Merrill Lynch vs Etrade

Merrill has similar features in some areas, but lacks streaming financial news and multi-leg option chains. As with E*Trade, graphs on Merrill’s app offers some useful tools, such as horizontal charting, company events, and technical studies.

Etrade vs Merrill Lynch

Who Has the Better Customer Service?

Both brokerage firms in our survey offer phone support 24 hours a day, 7 days a week. As for the quality, we have received competent service in our tests with each company. Both websites offer human chat, although E*Trade’s seems to be available more frequently. Neither company has a robo chat service, although it’s probably just a matter of time.

One area where there is an important difference is branch locations. E*Trade has 30, while Merrill has zero. Although there are some Merrill Edge locations inside Bank of America branches, these are not customer service venues. They are only for investment-advisory clients.

Our Recommendations

For futures traders, we recommend E*Trade over Merrill for the obvious reason that Merrill doesn’t offer them.

For investment advice, we’re going to suggest E*Trade. It has a robo service and several traditional packages to choose from.

If you want the best trading technology, it’s really a toss-up. If you plan to do mostly website trading, go with Merrill Edge for its trade bar. If you want a platform and don’t trade frequently, choose E*Trade for its browser system.

For IRA’s, we recommend Merrill Edge because E*Trade has several $25 fees.

Mutual fund investors will be better off with E*Trade.

Bargain seekers should take a look at the $0-commission Firstrade.


Merrill Edge vs E*Trade Summary

Merrill Edge and E*Trade offer a lot of great investment services at very reasonable prices. Despite a few weaknesses, E*Trade seems to have the edge instead of Merrill.

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