Merrill Edge vs. Vanguard

Estimated read time 8 min read


Vanguard vs Merrill Edge Range of Offerings
Asset Vanguard Merrill Edge
Short Sales  Yes Yes
No-Load, No-Fee Mutual Funds  Yes; 1,691 no load; 3,230 no transaction fee Yes; 1,631 no load; 3,157 no transaction fee 
Bonds  Yes Yes
Futures/Commodities  No No
Futures Options  No No
Complex Options  Single and multi-leg options Single leg and two-leg options
Robo Advisory Yes Yes
Cryptocurrency  No No
International Exchanges Only via live broker Only via live broker
Forex  No No
Fractional Shares  No Yes (DRIP)
OTCBB and Penny Stocks Yes No

Order Types

Vanguard’s ethos is centered on a long-term investing philosophy, so the broker’s range of order types are limited to those best suited for buy and hold investors. The only order types you can place are market, limit, and stop-limit orders. Similarly, Merrill Edge supports basic order types, including market, limit, stop limit, and trailing stop orders across all platforms, but it doesn’t offer the advanced conditional orders that active traders want. Both brokers allow you to select tax lots when closing out a position. When it comes to order types, neither broker has a clear edge over the other.

Trading Technology

Vanguard’s order routing technology is basic, just like its trading platform. It does not have a smart order routing technology, you cannot backtest or automate a trading strategy, and you will not be able to route your own orders. The broker reports price improvement on stock orders of $2.31 for a 100-share order compared to the National Best Bid and Offer in 2022.

Comparatively, Merrill Edge uses the Bank of America Merrill Lynch (BofAML) smart order router, which fills orders by first seeking price improvement rather than execution speed. For the second quarter ending June 30, 2021, Merrill’s average execution speed for market orders sized 100-1,999 for S&P 500 stocks is .007 seconds. For the same time period and order size, the broker promotes 99% of orders being executed at or better than the quoted price as well as an average savings of $24.60 per order. Both brokers also deserve kudos for not accepting payment for order flow from market makers. Overall, we found that Merrill’s platform has a slight edge over Vanguard as it pertains to their trading technology.

Costs

Like many brokers, both Merrill Edge and Vanguard charge no commissions on stock and ETF trades. Additionally, there are also no per leg commissions options trades. Per-contract commissions are $0.65 at Merrill and $1 at Vanguard. This means an order for 50 options contracts is $50 at Vanguard, while the same order is $32.50 at Merrill Edge. This makes sense as Vanguard’s ideal customer has a passive, long-term investment philosophy that isn’t likely to include a lot of options trading. Both brokers have no fees for inactivity, account closure, receiving wires, sending checks, or paper statements and trade confirmations. While Merrill has an account closure fee of $49.95 for retirement accounts, Vanguard does not. Additionally, Vanguard has a $10 wire fee for both domestic and internationally. Sending a wire using Merrill Edge will cost you $24.95. Overall, both brokers have low cost offerings, but Vanguard has the clear advantage in this category as long as you’re not a frequent options trader.

Account and Research Amenities

Although Vanguard is a large broker, it has more limited research and account amenities than one would expect from a large broker. This is because Vanguard was built for the buy and hold investor. In contrast, Merrill Edge has excellent fundamental research tools, including an impressive collection of proprietary and third-party research and stock rankings. While both brokers have stock screeners, Vanguard’s platform will not allow you to screen for technical indicators and screens cannot be turned into a watchlist. Moreover, Merrill Edge has an options screener, as well as a strategy builder, while Vanguard does not offer an options specific screening tool. 

Although Vanguard’s charts are customizable, there is no technical analysis available and the customization is limited. Merrill Edge’s MarketPro has full charting and customization capabilities with streaming real-time data. Both Merrill’s web and mobile platforms have limited charting capabilities that are enough for casual, long-term investors to trade on the go. Overall, Merrill Edge has a substantially better offering than Vanguard as it also includes news from multiple sources, a trade idea generator, robust third party research, a DRIP program, and more. You can still strengthen your financial toolbox with plenty of do-it-yourself resources with Vanguard, but the majority of this broker’s tools are centered around retirement planning.

Portfolio Analysis

Similar to its account and research amenities, Merrill’s portfolio analysis capabilities are exceptional. Merrill’s Portfolio Story is a proprietary tool that shows a complete breakdown of your portfolio, not only by sectors and holdings but also by performance, analyst ratings, and MSCI ESG scores. It’s a valuable piece of portfolio analysis technology and should be especially helpful to new investors. Vanguard’s Portfolio reports and analysis aren’t as robust but they are updated in real time on the Vanguard website. It is also customizable and you will have the ability to aggregate holdings from outside accounts. Both platforms lack trade journals as well as the ability to calculate the tax impact of a future trade. Overall, however,  Merrill Edge has a much better portfolio analysis offering than Vanguard.

Education

Both Vanguard and Merrill Edge provide educational resources for their customers. The focus of Vanguard’s content is on helping you set financial goals and create a plan of action on how to reach them. In addition to blogs, articles, webcasts, and other educational resources, Vanguard also offers life stage planning tools that are useful for do-it-yourself and beginner investors. With Merrill Edge’s investor education, you can pick an investing experience level or a topic—such as investing & markets, stocks, ETFs, options, mutual funds, margin, and others. You can also learn about various investment topics through a series of courses that go from basic to more sophisticated strategies. Although both Merrill and Vanguard offer a solid education, we found Merrill to be the better choice in terms of education due to its wider selection of topics and deeper dives into them.

Customer Service

Vanguard’s customer service is lacking when compared to Merrill Edge. It does not have 24/7 phone support, online chat, and you cannot speak with a live broker. Moreover, you will only have access to a financial advisor if you are a Vanguard Personal Services Advisor client. Merrill Edge has 24/7 phone support, online chat, and the added ability to get in-person support at most Bank of America branches. When it comes to customer service, Merrill Edge has a strong advantage over Vanguard.

Security

Although both brokers have security features in common, Merrill has an advantage over Vanguard in this category because of its additional features, including a soft token for login and high-risk trade authorization that is available through text, phone, and email. On top of all this, Merrill Edge has an aggregate loss limit of $1 billion, while Vanguard does not list its aggregate loss limit online.

Our Verdict

We recommend Merrill Edge in most situations because of its advantages in being a more diverse broker. If you’re already a Bank of America customer, choosing Merrill Edge may be a no brainer as Merrill Edge seamlessly integrates with the banking experience. Even if you’re not a BoA customer, many investors will enjoy Merrill’s proprietary and robust third-party research and portfolio analysis tools. Compared to Vanguard, Merrill Edge’s platform is more intuitive when it comes to the trading experience and it offers more account and research amenities that would be valuable to investors of all experience levels. 


Merrill Edge also outperforms Vanguard when it comes to security, trading technology, education, and customer service l. All things considered, we found Merrill Edge to be the better overall brokerage platform for most investors. The one exception, however, is if you are looking to be a buy and hold investor. If that is the case, Vanguard can be a more cost efficient broker to do this with, despite the lack of bells and whistles on its platform.

Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.

Read our full methodology.



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