Charles SCHWAB vs Merrill Lynch – Full-Service Brokers

If you are a novice and are willing to pay for guidance, a full-service broker may be a good investment. In such circumstances, investing in a full-service broker may be worthwhile. Not every business provides the same set of services or sells the same selection of goods. Business to business, prices will shift.

Self-directed investors and traders at a discount can choose between Charles Schwab and Merrill Lynch, two full-service brokers. These two brokers provide comprehensive services.

Examining and contrasting all of the markets these brokers provide is an impossible task. Online trading and price-cutting services will not be included in this analysis. Our evaluation will center on how each firm stacks up regarding its comprehensive services.

If you don’t have much money to invest or want to buy and keep stocks for a long time, you can benefit from a direct stock purchase or a dividend reinvestment plan (10 years or more). Because these strategies don’t generate revenue for brokerage firms, you may not hear about them.

As a full-service broker, Schwab provides its clients a wide range of options. On the other hand, they are also a cheap broker that allows customers to buy and sell stocks and ETFs without paying fees. Schwab provides several indirect crypto investment choices for those interested in investing in cryptocurrencies but who don’t want to trade cryptocurrencies directly. In the wake of its merger with TD Ameritrade, Merrill Lynch Wealth Management has become a significant player in the American brokerage industry. Every kind and investor may find what they’re looking for here. When you think of a brokerage and investment bank, Merrill is what you probably picture.

Merrill’s investment banking division is similarly cyclical since it generates fees by assisting client firms with issuing new blocks of stock. The volume of both primary and secondary offers decreases as stock prices do. To add insult to injury, Merrill and other brokerages risk losing money while trading on their client’s behalf. After a disastrous 1998, Merrill reduced its bond activities, losing out on revenues last year as interest rates fell and bond values rose.

Merrill has increased its online presence over the past several years, competing with Schwab in terms of commission rates to attract consumers who choose that broker. This, however, does little to stabilize the business’ income.

charles SCHWAB Overview

In April 1971, Chuck Schwab and several friends established First Commander Corporation; by 1973, the business had rebranded itself as Charles Schwab & Co., Inc. The “Through Clients’ Eyes” strategy is crucial to the company’s efforts since it places the consumer front and center. Schwab acquired TD Ameritrade in October 2020, with full integration expected between March and August 2023.

Charles Schwab is one of the most popular online stock exchanges, used by over 30 million people. Commission-free stock, ETF trading, and a robo advisor with no advising fee are just two examples of Schwab’s low-cost products and user-friendly tools ideal for a broad spectrum of investors.

And now that it has acquired rival brokerage TD Ameritrade, Schwab customers may gain access to all of TD’s cutting-edge research tools, including thinkorswim. Like its main competitors, Schwab provides access to digital currencies exclusively through instruments like bitcoin futures contracts, customarily suggested for highly experienced investors.

This broker excels in just about everything, and it always has the needs of individual investors in mind. Customers will love the excellent research, commission-free stock and ETF trading, trading platforms designed for novice and experienced traders, responsive and knowledgeable customer service, and generous sign-up bonus.

When you work with a significant player like Schwab, you can handle most of your financial needs in one place. You may open a Schwab bank account on their website in a matter of minutes if you already have a Schwab brokerage account. You may open a bank account with us and still receive the excellent service for which we are known.

Or maybe you need help managing your investments and are considering a robo-advisor. The Schwab Intelligent Portfolios service can take care of it for you. And here’s the rub: There is no price for the company’s management (just the small fees for any mutual funds it places you in.) If you want more in-depth support from a trained expert, you have the option of paying a little monthly charge for this service.

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And suppose you have any questions or would instead handle your business with Schwab in person. In that case, you may still visit one of their local locations. Read also the Ally vs Charles Schwab broker compare review.

Merrill Lynch Overview

One of the most successful financial institutions in Wall Street’s history was once known by the name Merrill Lynch & Co. It was once known as Merrill Lynch before being acquired by Bank of America (BAC) in 2009. Part of Bank of America, its function is to manage client assets.

Bank of America bid to acquire Merrill Lynch & Co. worth more than $40 billion in September 2008. Shortly after, the business accepted a buyout offer nearly 70% more than its depressed market price. For $50 billion in equity, Bank of America bought Merrill Lynch.

BofA developed Merrill Edge to rebrand itself and distance itself from retail investors. Given that Edge is itself a brand, we will not be evaluating it here.

Merrill Lynch is a more traditional brokerage business that caters to a wealthy clientele. However, Merrill Edge is a cheap broker that caters to smaller investors. In addition, Merrill Lynch and Merrill Edge are available to customers outside of the United States; however, Merrill Lynch is more often utilized. Since Merrill Lynch is operated by professionals, its price is less open to scrutiny. However, managed accounts at Merrill Edge only cost 0.45 percent annually, and trading incurs no commissions.

Most large and medium-sized U.S. cities have an office for Merrill Lynch Wealth Management, a national financial advising business. Merrill Lynch’s investment advisors have access to a wealth of resources thanks to its parent company, Bank of America.

Merrill Lynch Wealth Management is accessible to more people than ever due to the lack of required minimum balances for most account types. Options for investors range from fully automated accounts managed by Merrill Lynch to accounts managed by a local financial advisor under the client’s wishes.

Thousands of brokers and financial advisors work at Merrill, making it one of the largest wealth management businesses in the world. Due to its size, it is not in a position to impose a specific viewpoint on its advisers (or their clients). Instead, it provides a variety of methods and tools that may be used by customers and advisers to craft a tailor-made investment plan.

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First, your financial adviser will want to know how much you are willing to take on, how quickly you need your money, and how long you want to invest. With these three factors in mind, you can better pinpoint the optimal distribution of your assets. Equity, fixed income securities, certificates of deposit, money market funds, mutual funds, exchange-traded funds, and annuities are all asset types that can be invested in.

charles SCHWAB vs. Merrill Lynch Service & Feature Comparison

Fees & Account Types

Merrill has unveiled the Unlimited Advantage Account, which may be used to create consistent earnings in both good and poor economic times. Investors still have access to full-service brokers’ usual recommendations and services. Customers are not charged commissions but a flat yearly fee that begins at $1,500 and scales up based on the account’s asset size. The fee is 1% per year on stocks and 0.30% on bonds and cash.

Since purchasing U.S. Trust, Schwab can now cater to the needs of wealthy individuals and families by providing fee-based trust administration, estate planning, and private banking services. Just a few years ago, non-trading income amounted to 45% of Schwab’s total sales, and some experts predict that number will rise to 50% by the end of the year

To participate in the Merrill Lynch Investment Advisory Program, investors must pay a program fee to Merrill Lynch. This price comprises the Merrill Lynch Fee Rate and the Style Manager Expense Rate.

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Merrill Lynch’s maximum fee is 2.20 percent of assets under management (AUM) for balances under $5 million and 2.00 percent of AUM for balances over $1.75 million.

The second kind of payment is the Expense Rate for the Fashion Director. If you choose a Style Manager Plan, you will be charged a fee, which will vary depending on your chosen strategy. The typical rate is between zero percent to sixty-five percent of assets.

Fees for the program include all brokerage and advisory services linked to making investments. It’s important to note that the program’s cost does not cover every possible expense. Other fees, such as custodial fees and charges associated with individual investments, will also be the client’s responsibility.

Each month, a percentage of your account’s total market value is deducted as a charge. Merrill does not cost clients according to how well they do.

Schwab’s online trading fees for stocks and ETFs are $0. It charges $5 for trades made using its automated phone service (excluding REITs, which are still free) and $25 for trades made with a live representative. In addition to the standard rate, each side of an options transaction will cost an extra 65 cents, and frequent traders will not receive a discount.

Using a live agent over the phone is free of charge, while futures contracts cost $1.50 a contract per side. Investing in a mutual fund with a transaction charge will save you $49.95.

Pricing premiums for newly issued bonds are required to be declared in writing. In the case of Treasury securities, this includes auction listings, which carry no fees. Each bond issued by a corporation is worth $1.

Education and Research

At Schwab, we discovered a wealth of valuable learning materials. The first is a quarterly publication named “On Investing,” which provides broad financial education through articles, videos, branch seminars, and so on. A Schwab account is not required to access the file.

Security profiles constitute a significant component of Schwab’s educational offerings for prospective investors. There is a lot of information provided. We located information on forthcoming company events, earnings history, peer comparisons, important news articles, and equity reports for equities. Independent sources like Ned Davis, Market Edge, Argus, and Morningstar are examples of such organizations. Schwab also provides its own stock rating reports.

Schwab’s screening tools offer a wide variety of search parameters. Payout ratio (TTM), Credit Suisse research rating, earnings misses, price-to-book ratio, and many more might all be used to filter stocks. Searches on Schwab’s website can be narrowed down to specific categories using the site’s pre-defined screens.

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Retirement Accounts

Traders can open an account with Merrill Lynch for more than simply trading. Roth IRAs, Traditional IRAs, SEP IRAs, SIMPLE IRAs, and Rollover IRAs are all available to investors. The 529 plan and the ESA are options for those who want to save money for college. Merrill Lynch offers both UGMA and UTMA accounts.

Schwab also offers several options for retirement savings to choose from. Some of the available varieties are SEP, SIMPLE, Roth, regular, inherited, and rollover IRAs. The brokerage business provides a Personal Choice Retirement Account® (PCRA) and a 401(k) plan for those who are self-employed (k).

Managed Accounts 

Merrill Lynch handles the trading for its clients’ securities accounts, unlike many online brokerage firms, as clients are responsible for managing their own accounts. In exchange, the firm takes a percentage of assets as a fee. Client assets are held by one connected firm, while investment choices are made by a separate associated company. Despite Merrill Lynch’s credibility, it’s not ideal to have the two functions performed by subsidiaries of the same company. FINRA oversees it, and the SIPC provides insurance for its clients.

Schwab’s commendable account management services kept the probe moving forward, despite the firm’s attractive pricing for self-directed traders. A robo program does not cost anything but requires a sizable cash level in the account at all times. The fact that several of the ETFs are Schwab funds is likely to raise some questions. The minimum opening deposit for an individual or joint account is $5,000.

There are various reasonably priced classic software options available. If you invest $500,000, the lowest rate you’ll pay with Schwab Private ClientTM is 0.80%; more significant amounts earn lower rates. Multiple asset classes are available for trading, and each client is allocated a team of human advisors.

Schwab also offers a hybrid solution that integrates digital administration with human counseling. The price of this service is $30 monthly plus an additional $300 for financial planning.

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Banking & Cash Management

A cash management account, aptly termed the Cash Management Account, is available from Merrill Lynch. The SIPC provides deposit insurance of up to $250,000. You may use the Visa pre-paid debit card and take advantage of bill pay, wire transfers, limitless check writing, and more with this account. Using this credit card, you will only be charged once for all of your monthly withdrawals. Withdrawals from Bank of America ATMs are free with this card. For ATM fees incurred by a financial institution other than Bank of America, Merrill Lynch will reimburse its customers up to a maximum of $200 annually. There is a hefty $125 annual cost for the Cash Management Account and an additional $25 yearly fee for each subaccount. If you keep at least $250,000 at Merrill Lynch, you won’t have to pay these fees.

Customer Service

Merrill Lynch provides telephone support for clients. Support is available all day, every day of the week. If you have any queries about your account or finances, they can help you out. Suppose you are already logged into the website. In that case, you may also send an email to the broker using the internal messaging system.

Suppose a trader still has questions after reading through the broker’s enormous library of instructional resources. In that case, they may contact a Schwab representative at any time. There is also a live chat feature available whenever you need it, seven days a week. Schwab’s lack of a robo-chat service is one area where it falls short compared to some of its competitors. Provided is a translation service for the Chinese language.

Clients who would instead do everything on their own can go to the broker’s website and select the “Service” option from the main menu. A trusted contact person adder, electronic filing, and paperless options are commonplace in self-help tools.

Unfortunately, Schwab is well known for its investment offerings rather than its innovative banking services. You may write checks and use a debit card without paying fees with a checking account. With no restrictions, account holders may get their ATM costs repaid anywhere they are on the globe. Only Schwab is offering this incredible discount. The absence of monthly minimums and service charges is icing on the cake. The disadvantage is that the checking account at Schwab must be connected to a brokerage account.

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My Preference: charles SCHWAB Wins Over Merrill Lynch

Schwab excels in every metric we’ve looked at, earning a perfect score in every case. Additionally, the product’s minimal commission structure makes it a bargain. Merrill Lynch, in my opinion, needs to define its mission and goals. Under the Merrill Edge brand, Bank of America appears to be entering the growing self-directed internet trading market.

Merrill Lynch Wealth Management is a good option for anyone looking for expert financial advice. Bank of America owns a full-service brokerage organization that offers account management, financial advice, and more. In the following piece, we’ll look closely at the broker’s services and compare them to those of similar advising businesses.

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