In the matchup between Fidelity and Merrill Lynch, Fidelity is generally considered the better overall option for most investors due to its lower costs, broader investment selection, more robust research and educational tools, and superior trading platforms. However, Merrill Lynch, particularly its self-directed Merrill Edge service, has a significant advantage for those who are existing Bank of America customers and want seamless banking and investing integration along with exclusive rewards. Ultimately, the superior choice depends on an investor's specific needs, priorities, and existing banking relationships.
The Fidelity vs. Merrill Lynch comparison
Fidelity and Merrill Lynch are financial powerhouses that cater to different client bases. When evaluating them, it's essential to understand that while Fidelity is an independent financial services firm, Merrill Lynch is a subsidiary of Bank of America. This fundamental difference shapes their product offerings and client advantages.
For the average investor: Why Fidelity has the edge
For the typical investor who is not a dedicated Bank of America customer, Fidelity offers a more compelling package.
- Cost: Fidelity is a clear winner on cost. While both platforms offer $0 commissions for online stock and ETF trades, Fidelity has significantly lower fees in other key areas.
- Low-cost funds: Fidelity offers a broader selection of fee-free mutual funds, including its proprietary Fidelity ZERO funds, which have no expense ratios.
- Margin rates: Fidelity's margin rates are consistently lower than Merrill Edge's.
- Account fees: Fidelity charges fewer nuisance fees, such as no fees for IRA closures, while Merrill Edge has a $49.95 fee.
- Research and tools: Fidelity's offerings for market research and trading tools are more extensive and higher-rated.
- Research reports: While both offer quality research, Fidelity provides a larger library of downloadable PDF reports and innovative features like social media sentiment data.
- Trading platform: Fidelity's Active Trader Pro desktop platform is feature-rich, providing more tools and advanced order types than Merrill Edge.
- Investment selection: Fidelity provides a wider array of investment products, including access to international stock exchanges, more mutual funds, and complex options strategies.
- Educational resources:StockBrokers.com gives Fidelity a higher rating for investor education. Fidelity provides a wide variety of learning materials, including webinars and articles for all experience levels.
- Mobile experience: While both have good mobile apps, Fidelity's offers more advanced trading functionalities and charting capabilities.
For the Bank of America customer: Merrill Lynch's key advantages
Merrill Lynch and its Merrill Edge platform are designed to be a natural extension for Bank of America customers, and this integration is its greatest strength.
- Seamless integration: Bank of America customers can manage their banking, credit cards, and investments from a single unified dashboard. This makes it easy to move money quickly between accounts.
- Preferred Rewards: This program offers significant perks for Bank of America and Merrill customers with high combined balances. Benefits can include reduced or waived fees, credit card rewards, and discounts on loans.
- In-person support: For clients who value face-to-face service, Merrill clients can access in-person assistance at Bank of America branches.
- Automated investing: The Merrill Guided Investing robo-advisor includes human portfolio management and leverages a client's total financial picture for a more holistic approach.
A closer look at advisor services
Beyond the self-directed platforms, the full-service advisory offerings are also key differentiators.
- Fidelity Go: This robo-advisor service is competitively priced and includes access to financial coaches once your balance reaches $25,000. It uses proprietary, no-expense-ratio Fidelity Flex funds to keep costs low.
- Merrill Guided Investing: This robo-advisor is more expensive but offers access to human oversight for a higher fee. The primary draw is for existing Bank of America clients who can use their Preferred Rewards status to lower costs.
Which one is right for you?
| Consideration | Choose Fidelity if... | Choose Merrill Lynch if... |
|---|---|---|
| Costs | You prioritize low fees, especially for robo-advisory services, IRA transfers, and margin trading. | You qualify for the Bank of America Preferred Rewards program, which can lower fees and offer other perks. |
| Research & Tools | You are an active or serious trader who wants advanced charting, screeners, and a wider variety of third-party research. | You want straightforward research and value the seamless integration with your Bank of America accounts. |
| Banking | You are an investor first and plan to use the brokerage's cash management features, which offer competitive interest rates on uninvested cash. | You are an existing Bank of America customer who wants to consolidate all your banking and investing activities in one place. |
| Investment Selection | You want a vast selection of mutual funds and access to international stock exchanges. | You primarily invest in standard stocks, ETFs, and fixed income and don't need access to international markets. |
| Advisor Services | You want a low-cost robo-advisor that includes access to human coaching at higher balance tiers. | You are a Bank of America client who wants automated management with human oversight and value in-person support. |
| User Experience | You are a beginner or a seasoned investor who values a well-regarded, feature-rich desktop platform and a highly-rated mobile app. | You are a casual investor who values a simple, user-friendly interface that integrates easily with your other banking products. |
Final verdict
While Merrill Lynch offers a compelling solution for existing Bank of America clients seeking convenience and integrated rewards, Fidelity is the overall stronger brokerage for most investors, particularly those focused on cost, research depth, and breadth of investment options. For those without an existing Bank of America relationship, Fidelity's value proposition is hard to beat.