Published in: Balance Transfer | Dec. 4, 2018

Merrill Edge vs. TD Ameritrade: Which Is the Better Investment Brokerage?

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These two brokers have a lot to offer, but whether Merrill Edge or TD Ameritrade is the better pick depends mostly on your account balance and trading style.

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Investors have it better than ever. Online discount brokerages like TD Ameritrade and Merrill Edge make investing in stocks, ETFs, and mutual funds easier and less expensive than ever before.

TD Ameritrade and Merrill Edge offer low trading commissions and free tools and research to help you make better investment decisions. Here's how these two brokers compare for investors who need an investment brokerage account to buy and sell stocks, ETFs, options, and funds.

Trading costs and commissions

Price isn’t the differentiator it used to be, as the best online brokers offer basic stock trades at prices that differ by as little as $2 from top to bottom. For the most common types of trades, there is little difference in prices between Merrill Edge and TD Ameritrade.

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)
TD Ameritrade $6.95 per trade $6.95 plus $0.75 per contract $49.99 (thousands for free)
 

Both brokers offer ways to trade cheaply. Merrill Edge customers who keep qualifying balances of $50,000 or more score 30 free trades per month. If you maintain a balance in excess of $100,000, you qualify for 100 free trades.

TD Ameritrade offers compelling new customer bonuses (free trades and cash!) in addition to thousands of mutual funds and exchange-traded funds you can buy or sell without paying a commission or transaction fee.

Commission-free funds and trades

Virtually all brokers now offer investors the ability to buy and sell "no-transaction-fee" (NTF) mutual funds and ETFs. Investors who prefer investing in funds may prefer a specific broker for the fact that they can invest in their favorite funds without paying a fee on each transaction.

Fund type Merrill Edge TD Ameritrade
Total mutual funds More than 3,800 More than 12,500
No-transaction-fee mutual funds More than 1,400 More than 1,900
Commission-free ETFs None More than 300
 

TD Ameritrade recently revamped and expanded its list of commission-free ETFs, which now includes more than 300 ETFs from top issuers including iShares, First Trust, Invesco, and SPDR State Street. When comparing Merrill Edge vs. TD Ameritrade in fund selection, the latter has a clear advantage in the number of mutual funds it offers on its service.

This may be a big point of differentiation. While Merrill Edge effectively offers commission-free trades on all ETFs due to its rewards program (30 or 100 free trades per month), those who have account balances of $50,000 or less would likely find TD Ameritrade to be a better broker for commission-free ETF trades.

Account minimums

TD Ameritrade and Merrill Edge are easily accessible to ordinary investors, as neither brokerage has a minimum account requirement. These no-minimum brokers are both excellent choices for beginning investors for precisely this reason -- you can start small.

Practically speaking, there are certain minimums for some type of investments. Most mutual funds have minimums -- ranging from $1,000 to $3,000 or more. Furthermore, you'll need to be able to buy at least one share of a stock or ETF to make an investment. Importantly, though, neither broker has a requirement on how much money you need to simply open an account.

International stocks and ADRs

TD Ameritrade and Merrill Edge do not offer trading on foreign markets. However, investors can purchase American Depositary Receipts (ADRs), which are traded on U.S. markets and represent ownership of a foreign company in much the same way as direct stock ownership.

Note the important distinction between buying stocks on international stock markets and investing in foreign stocks through funds. Investors can buy U.S.-listed ETFs and mutual funds that hold foreign stocks through their TD Ameritrade or Merrill Edge brokerage account, just as they would buy any U.S. ETF or mutual fund.

In short, TD Ameritrade and Merrill Edge aren’t a good choice if you want to trade stocks on the London Stock Exchange, for example, but they’re just fine if you want to use funds or ADRs to own foreign stocks. For foreign stock trading, Fidelity or Charles Schwab would likely be a better choice, given they offer the ability to place trades overseas through an online account.

Trading platforms

Understandably, those who trade most frequently are likely to place more emphasis on a broker’s trading platform rather than the small differences in commissions.

TD Ameritrade works well as a brokerage for traders and investors alike. It offers a robust mobile app that offers all the features typically found in browser or desktop platforms, including Level II quotes and conditional orders. Plus, the app is available on iOS, Android, and Windows, so it works on practically any device.

Of course, active traders love TD Ameritrade’s highly-rated thinkorswim platform for its Level II quotes, complex options functionality, and hundreds of charting features for active traders. The big perk is that TD Ameritrade makes thinkorswim available, completely free, to customers of any activity level or account balance. For this reason, TD Ameritrade is by far a top pick for investors who want a high-quality trading platform without limitations.

Merrill Edge doesn’t offer all the bells or whistles that TD Ameritrade does. Though it has its own mobile apps and web-based trading platform, its desktop platform, Merrill Edge MarketPro, doesn’t offer as much functionality as thinkorswim. Sure, it offers a customizable dashboard, and advanced charting, but it lacks many of the basic features, like one-click trading, or complex options trades. Also, Merrill Edge Market Pro is only available to customers who place at least 15 trades per quarter or have at least $50,000 in assets.

If the platform is what you care about most, then TD Ameritrade would almost certainly win you over. That said, those who place the infrequent trade and invest for the long haul will find that just about any broker will fit their needs.

Research quality and tools

Both TD Ameritrade and Merrill Edge offer stock and mutual fund screeners that allow you to sort stocks and funds with quantitative parameters like fees and historical returns. When it comes to research, there are slight differences between these two brokers.

TD Ameritrade offers a line-up of third-party research that includes reports from CFRA, Credit Suisse, Market Edge, and Ford. In addition, it offers ETF ratings from CFRA and Morningstar, which is a big advantage for fund investors. Expect to find volumes of content to read and digest, as TD Ameritrade offers more than 45 daily market and portfolio reports from a host of different research groups.

Merrill Edge’s ties to BofA/Merrill Lynch give it a leg up in the research department, as BofA/Merrill Lynch covers more than 1,300 individual stocks, giving its clients unique access to in-depth research. I like the company’s “Stock Story” feature, which gives you a quick high-level view of most publicly-traded companies, how they make their money, and what analysts are expecting of the company going forward.

Which is the better investment brokerage?

TD Ameritrade stands out as having a value proposition that favors traders and long-term investors alike, regardless of account size. With thousands of mutual funds, more than 300 commission-free ETFs, and a platform fit for every type of investor, there’s a reason why it is one of the largest discount brokers. For investors and traders who put particular emphasis on trading platforms, TD Ameritrade is easily a top choice.

For investors with large account balances ($50,000+), Merrill Edge is very hard to beat on commission prices. Given that investors can qualify for 30 free stock and ETFs trades per month for having a $50,000 average balance, it offers one of the few ways to trade stocks and ETFs completely free. That said, investors who place fewer trades or have smaller account balances simply have less reason to choose Merrill Edge over competing low-cost discount brokers.

In short, if you’ll have more than $50,000 in combined Merrill Edge and Bank of America accounts, Merrill Edge is the no-brainer pick. If you care more about the platform than small differences in pricing, or plan to start with a small balance, TD Ameritrade’s leading platform and commission-free ETFs give it the edge over its competitor.

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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