If you're looking for a new brokerage account to buy and sell stocks and other investments, there is no shortage of choices available to you. Two of the most popular brokerages right now are Merrill Edge, which is Bank of America's brokerage arm, and Robinhood, which pioneered zero-commission investing and a user-friendly approach to buying stocks.
While both of these are solid choices for many people, neither one is a great fit for everyone. There are some big differences between the two, and in this Merrill Edge vs. Robinhood comparison, we'll take a closer look at these, as well as the similarities, to help you determine which (if any) is the best option for you.
Merrill Edge vs. Robinhood: At a glance
| Offer | Merrill Edge® Self-Directed | Robinhood |
|---|---|---|
| Rating | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
| Commissions | $0 for online stock and ETF trades | $0 for stocks, ETFs, and options |
| Account Minimum | $0 | $0 |
| Next Steps | Read Review | Open Account for Robinhood Read Full Review |
Merrill Edge vs. Robinhood: Commissions & fees
Like most brokers, both Merrill Edge and Robinhood offer zero-commission stock trading, and no monthly maintenance fees. But that's where the similarities end on fee structures.
Robinhood has a big advantage for options traders, as it is one of the only brokers where investors can buy and sell options commission-free. Merrill Edge charges a per-contract fee of $0.65, which is in line with most of its peers. Plus, Robinhood offers commission-free cryptocurrency trading, while Merrill Edge doesn't offer cryptocurrencies at all.
On the other hand, Merrill Edge has a standard $19.95 commission for mutual fund investments and offers thousands of funds on a no-transaction-fee (NTF) basis, while Robinhood doesn't support mutual fund investments at all.
LEARN MORE: Best Options Trading Platforms
It's also worth noting the difference in account transfer fees, as there may come a time when you want to move your account to another broker. Merrill Edge charges a $49.95 fee for a full account transfer, while Robinhood is a bit higher at $75.
| Merrill Edge | Robinhood | |
|---|---|---|
| Stock & ETF Commissions | $0 | $0 |
| Options Commissions | $0.65/contract | $0 |
| Crypto Commissions | N/A | $0 |
| Mutual Fund Commissions | $19.95 | N/A |
| Account Transfer Fee | $49.95 | $75 |
| Account Maintenance Fee | $0 | $0 |
Data sources: Merrill Edge and Robinhood. Note: All commissions are for online or mobile trades. Broker-assisted transactions may have higher fees.
Merrill Edge vs. Robinhood: Investments available
Merrill Edge and Robinhood both offer stocks, ETF, and options on their respective platforms, but that's where the similarities end.
For one thing, Robinhood offers the ability to buy fractional shares of stock, which can be a big perk for newer investors who may not have enough available cash to buy a full share of some of their favorite companies. Robinhood also offers the ability to buy and sell several different cryptocurrencies, which most bank-affiliated brokers like Merrill Edge do not.
On the other hand, Merrill Edge is the only one of the two that offers mutual funds and bonds through its platform. And because Merrill Edge is part of Bank of America, investors can buy CDs if they want a stable income investment.
It's also worth pointing out that neither platform offers futures or foreign currency (forex) trading, so if these are part of your investing strategy, you'll need to look elsewhere.
| Merrill Edge | Robinhood | |
|---|---|---|
| Stocks and ETFs | Yes | Yes |
| Fractional Shares | No | Yes |
| Options | Yes | Yes |
| Mutual Funds | Yes | No |
| CDs | Yes | No |
| Bonds | Yes | No |
| Futures | No | No |
| Crypto | No | Yes |
| Currencies (Forex) | No | No |
Data sources: Merrill Edge and Robinhood.
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Merrill Edge vs. Robinhood: Account types available
Merrill Edge is a clear winner in this area for most investors. Robinhood's platform is designed for individual investors who want the ability to buy and sell stocks, options, and cryptocurrencies. It doesn't offer the ability to open a joint investing account, and it doesn't offer retirement accounts or any other account types.
On the other hand, Merrill Edge offers a variety of account types that will meet the needs of most customers. In addition to standard brokerage accounts, Merrill Edge allows customers to open joint accounts, retirement accounts (including small business accounts like SEP IRA and SIMPLE IRA), custodial accounts like UGMA and UTMA, as well as 529 college savings plans.
What's more, because it is a subsidiary of Bank of America, Merrill Edge investors can open and integrate Bank of America checking and savings accounts. Both can be accessed through the Merrill Edge desktop and mobile portals and money can be seamlessly transferred between brokerage and bank accounts.
READ MORE: Best Online Stock Brokers for Beginners
It's worth noting Robinhood does offer an interest-bearing cash management feature, and while both firms offer margin trading, Robinhood only offers it to Robinhood Gold customers ($5 monthly fee), although at significantly lower interest rates than Merrill Edge charges.
| Merrill Edge | Robinhood | |
|---|---|---|
| Taxable Brokerage | Yes | Yes |
| Joint Tenant | Yes | No |
| Margin | Yes | Yes, with Robinhood Gold |
| Robo-Advisor | Yes | No |
| Traditional IRA | Yes | No |
| Roth IRA | Yes | No |
| Other IRA | Yes | No |
| Custodial | Yes | No |
| Checking | Yes | No |
| Savings | Yes | Yes |
| Credit Card | Yes | No |
Data sources: Merrill Edge and Robinhood.
Merrill Edge vs. Robinhood: Mobile app and trading platforms
Both Merrill Edge and Robinhood have highly rated apps that are functional and easy to use, although Robinhood is clearly the mobile-first platform. Investors who prefer to use an app to simply buy and sell stocks and options often find Robinhood to be one of the most user-friendly apps in the market.
Merrill Edge's investing app holds ratings of 4.7 and 4 out of 5 stars on the App Store and Google Play store, respectively. Robinhood's ratings are 4.2 and 3.8, but with a big asterisk, as its ratings were significantly higher prior to the "meme stock" craze of early 2021, when it was forced to suspend trading in certain volatile stocks to the disappointment of many customers.
Merrill Edge reviews often call out the ability to seamlessly integrate with other Bank of America accounts and the many features of the app. Robinhood reviews often cite the user-friendliness of the app.
While Robinhood has a web-based trading platform, it's important to realize it is designed as a mobile-first brokerage. It doesn't offer sophisticated trading tools, educational resources, or many features beyond basic investing functionality. However, Merrill Edge offers the MarketPro desktop trading platform that offers a fully-customizable trading layout, which might be more appealing to sophisticated investors.
Related: Best Free Stock Trading Apps
Should you use Robinhood or Merrill Edge?
Both of these are excellent brokerage options but are clearly targeted to different types of customers. Merrill Edge is the more well-rounded of the two, aiming to provide investment solutions that meet the needs of most investors, while Robinhood is designed for the younger, active trader crowd.
Robinhood is the better choice for your needs if :
- you're looking to trade cryptocurrencies
- you want to buy fractional shares of stock
- you're a part of the active trader crowd
Merrill Edge is the better choice for your needs if:
- you're looking to open a retirement account
- you want to invest in mutual funds, or
- you want a robo-advisory service to put some of your portfolio on auto-pilot
If you simply want an account to buy and sell stocks, ETFs, and/or options, both of these could be a good fit for you. It depends on what features and platform are most appealing to you as an investor.
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By:Matt Frankel, CFP®
Writer, Analyst
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
I'm Matt Frankel, a Certified Financial Planner® and investment advisor with a comprehensive background in personal finance and investment strategies. With over 4,500 published articles and a 2017 SABEW Best in Business award, I have consistently demonstrated my expertise in the field. My weekly investment column, "Ask a Fool," is syndicated in USA Today, and my work has been featured on major outlets such as CNBC, Fox Business, and MSN Money.
Now, let's delve into the Merrill Edge vs. Robinhood comparison:
Commissions & Fees:
- Both Merrill Edge and Robinhood offer zero-commission stock trading and have no monthly maintenance fees.
- Robinhood stands out with commission-free options trading and cryptocurrency trading, while Merrill Edge charges a per-contract fee for options and doesn't support cryptocurrencies.
- Merrill Edge has a $19.95 commission for mutual fund investments, whereas Robinhood doesn't support mutual funds.
- Merrill Edge charges a $49.95 fee for a full account transfer, while Robinhood's transfer fee is slightly higher at $75.
Investments Available:
- Both platforms offer stocks, ETFs, and options.
- Robinhood allows the purchase of fractional shares and supports cryptocurrency trading, which Merrill Edge does not.
- Merrill Edge provides mutual funds and bonds, and as part of Bank of America, it offers CDs for stable income investments.
- Neither platform supports futures or foreign currency (forex) trading.
Account Types Available:
- Merrill Edge offers a more extensive range of account types, including standard brokerage accounts, joint accounts, retirement accounts (Traditional, Roth, and others), custodial accounts, and college savings plans.
- Robinhood caters primarily to individual investors and lacks offerings like joint accounts, retirement accounts, or other diverse account types.
Mobile App and Trading Platforms:
- Both Merrill Edge and Robinhood have well-rated mobile apps, with Merrill Edge's app holding ratings of 4.7 and 4 out of 5 stars on the App Store and Google Play.
- Robinhood is designed as a mobile-first platform, and while it has a web-based platform, it is more basic compared to Merrill Edge's MarketPro desktop trading platform, which offers a fully-customizable trading layout.
Conclusion:
- Robinhood is better suited for those interested in cryptocurrency trading, fractional shares, and active trading.
- Merrill Edge is a more versatile option, particularly if you're looking for retirement accounts, mutual funds, and a robo-advisory service.
Ultimately, the choice between Merrill Edge and Robinhood depends on your specific investment preferences and needs.
