Published in: Buying Stocks | Dec. 4, 2018

Merrill Edge vs. Fidelity: Which Online Stock Broker Is Best?

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In this head-to-head contest, we’ll look at Merrill Edge vs. Fidelity and how they compare for investors looking for the right online stock broker.

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When you're ready to invest, you'll need to open a brokerage account to place orders to buy and sell stocks, ETFs, and mutual funds. Two popular choices, Fidelity and Merrill Edge, both rank highly as some of the best brokers for beginners and experienced investors and traders alike. Here’s how they compare on prices, research, trading platforms and more.

Trading costs and commissions

Fidelity and Merrill Edge both offer competitive trading commissions that enable their investors to buy and sell stocks, ETFs, options, and mutual funds, without breaking the bank. Here’s how Merrill Edge and Fidelity compare on commission prices by type of investment.

Broker Stocks and ETFs Stock options Mutual funds
Merrill Edge $6.95 per trade $6.95 plus $0.75 per contract $19.95 (thousands for free)
Fidelity $4.95 per trade $4.95 plus $0.65 per contract $49.95 (thousands for free)
 

As you can see, when it comes to Merrill Edge vs. Fidelity, the difference for the trades investors make most often amounts to just a couple dollars. And though Merrill Edge may appear to be more costly at first glance, some investors who keep high balances in their brokerage account or in Bank of America deposit accounts can qualify for 30 or 100 free trades every single month.

Combined balances of $50,000 will qualify you for 30 free trades per month. To receive 100 free trades per month, you’ll need combined balances of $100,000 or more. Note that the free trades only apply to stocks and ETFs. Options and mutual fund transactions are not included as free trades.

Regardless of your account balance, Fidelity offers many exchange-traded funds and mutual funds you can buy and sell for free, which makes it a great choice for fund investors who are just getting started.

Commission-free ETFs and NTF Funds

Fidelity and Merrill Edge both maintain a list of funds that are no-transaction-fee (NTF), meaning that the brokerage does not charge a fee to buy or sell. In addition, Fidelity also offers a long list of commission-free ETFs that its customers can buy or sell without paying a commission.

Fund type Merrill Edge Fidelity
Total mutual funds More than 3,800 More than 12,200
No-transaction-fee mutual funds More than 1,400 More than 3,800
Commission-free ETFs None Nearly 100
 

Investors who prefer to invest in mutual funds or ETFs in lieu of individual stocks may consider fee-free funds as the single most-important reason to pick one brokerage over another. Fidelity’s list of commission-free ETFs is particularly attractive, since it offers many of the most popular and least expensive iShares ETFs on its list of free choices.

In addition, Fidelity recently rolled out completely free index funds for its customers. These funds have no transaction fees to buy or sell, and do not charge management fees. Thus, you could open an account with Fidelity, pay nothing to invest in its Zero funds, and then pay nothing in ongoing management fees from there on out, resulting in a completely free investment portfolio.

Account minimums

Fidelity and Merrill Edge offer no-minimum accounts, which may be advantageous for investors who want to start small. So, even if you can only afford to deposit $100 today, and make small deposits over time, either broker could work for you.

You will need to have enough money to buy at least one share of a stock, ETF, or mutual fund to make a trade, so you shouldn’t expect that you’ll be able to make an investment if you only deposit $1 into your account. That said, new investors could easily get started with $1,000 or less by sticking with commission-free funds and ETFs.

Trading platform

Active traders tend to demand more of a brokerage than long-term investors. Fidelity does well to cater to both types, offering an easy-to-use browser solution as well as a fully featured platform for active traders. Its basic web interface offers streaming quotes through its watch-list feature, plus some basic charting tools.

Fidelity’s Active Trader Pro platform on desktop offers all the functionality one would expect from a real trading platform. That said, Active Trader Pro is typically offered to people who make at least 36 qualified trades per year, or to customers who call in to specifically ask for access (some restrictions may apply).

Merrill Edge offers a browser-based solution, in addition to Merrill Edge MarketPro, a desktop trading platform. Though it offers many analytical tools, screens, and a customizable display, some users lament that it has a few missing features, like the ability to place complex options trades or conditional orders. Investors who keep a balance of $50,000 or make 15 trades per quarter qualify for access to Merrill Edge MarketPro.

As long-term investors ourselves, we don’t obsess over trading platforms, and the truth is that a “good” trading platform often comes down to personal preference.

International stocks and ADRs

Fidelity's clients can trade on international markets in 25 different countries and in 16 currencies. Its customers can also trade American depositary receipts (ADRs), which are effectively shares of a foreign stock that trade domestically. The only downside is that international trading costs more at Fidelity; investors will pay a commission that varies by the particular country and exchange.

Merrill Edge customers can trade ADRs, but it does not allow for trading directly on a foreign stock exchange. So, while you’ll have no problem buying shares of BP or Burberry with an ADR, Merrill Edge isn’t a good fit to trade stocks that only trade in London, for example.

Many investors simply get exposure to international markets by holding diversified mutual funds and exchange-traded funds. If that’s how you plan to invest internationally, then there isn’t a meaningful difference between either of these brokers, or any online discount broker, for that matter.

Research quality and tools

As a general rule of thumb, investors benefit from having access to a wealth of research tools and opinions.

Fidelity often takes the top spot in research among discount brokerages as it provides research from 12 different independent research firms. In addition, the brokerage makes it easy to view analyst upgrades and downgrades, and provides access to Thomson Reuters StarMine, which combines analyst ratings and weights them by the analysts’ historical accuracy. Fidelity also offers its own proprietary “thematic” research, such as deep dives into certain sectors or investment themes (think a white paper on FANG stocks, for example).

Merrill Edge is differentiated by its relationship with Bank of America, offering access to BofA/Merrill Lynch ratings on more than 1,300 U.S. stocks. In addition, its customers can tap into a wealth of research from Morningstar and Lipper for funds, as well as Merrill Edge’s proprietary “Stock Story” feature for individual stocks. Merrill Edge also offers downloadable research for mutual funds and ETFs, which sets it apart for investors who prefer to invest in funds instead of picking individual stocks.

Who wins: Merrill Edge vs. Fidelity

Whether you invest in funds or individual stocks, you can find plenty to like about Fidelity and Merrill Edge's low-cost commissions, access to research, and highly rated mobile apps.

Fidelity scores a win for having the lowest base commission prices, as well as a larger assortment of commission-free ETFs and no-transaction-fee mutual funds. With a large selection of low-cost iShares ETFs you can buy or sell for free, thousands of no-transaction-fee mutual funds, and the only completely free “Zero” mutual funds, long-term investors could easily build a diversified portfolio of investments just with its fee-free funds.

On the other hand, Merrill Edge gets a win for people who have an existing relationship with Bank of America, or those who can commit to making a large deposit. Merrill Edge’s primary advantage is that it offers 30 free stock and ETF trades for keeping a balance of $50,000 or more, and 100 free trades each month for keeping a balance of $100,000 or more. Thus, if you plan to make a large deposit, or can hit the thresholds for free trades by moving your IRA or rolling over a 401(K), Merrill Edge would likely be the most cost-effective choice of any brokerage.

Using the wrong broker could cost you serious money

Over the long term, there's been no better way to grow your wealth than investing in the stock market. But using the wrong broker could make a big dent in your investing returns. Our experts have ranked and reviewed the top online stock brokers - simply click here to see the results and learn how to take advantage of the free trades and cash bonuses that our top-rated brokers are offering.

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