Interactive Brokers vs Merrill Edge Self-Directed

(November 2024)

In This Article

Our Verdict

Interactive Brokers is the go-to choice for active and professional traders. You benefit from extensive global market access, advanced trading capabilities, and low costs. If you trade frequently and require sophisticated tools and a wide range of international investment options, Interactive Brokers offers a platform that meets those demands efficiently.

Merrill Edge Self-Directed stands out for long-term investors and those seeking comprehensive support and integration. It seamlessly integrates with Bank of America accounts, providing a cohesive financial ecosystem. Merrill Edge also offers robust research offerings and user-friendly platforms, making it an excellent choice if you value detailed insights and guidance in your investment journey.

Both platforms excel in different areas, but for a more rounded recommendation, go for Merrill Edge Self-Directed.

Why Choose Interactive Brokers

If you’re a sophisticated, high-volume trader looking for a comprehensive platform with access to a wide array of global markets and advanced order types, Interactive Brokers is your go-to choice. You’ll appreciate its professional-grade Trader Workstation platform, diverse range of tradable securities, and competitive pricing structure.

Who Interactive Brokers Is Best For

If you fall under any of these categories, then Interactive Brokers is the best for you because it:

  • Caters to advanced and professional traders
  • Benefits high-volume traders
  • Access global markets as a global investor
  • Empower options traders
  • Support algo traders
  • Explore a wide range of products
  • Appeal to margin traders
  • Attract cost-conscious investors

Who Interactive Brokers Is Not Right For

Here are the reasons this option may not be the best choice:

  • Reconsider if seeking extensive guidance
  • Opt out if you are a casual, low-volume trader
  • Look elsewhere if you prioritize mobile trading
  • Rethink if you are an investor focused on mutual funds
  • Pass on IBKR if you need fractional share trading
  • Choose another option if you seek a simplified, all-in-one financial solution

Why Choose Merrill Edge Self-Directed

If you’re a long-term, buy-and-hold investor, especially if you already bank with Bank of America, Merrill Edge Self-Directed is a better fit for you. You’ll benefit from its intuitive platforms, strong research and educational resources, and seamless integration with Bank of America accounts, making it an excellent choice for those who prioritize ease of use and a more guided approach to investing.

Who Merrill Edge Self-Directed Is Best For

Merrill Edge Self-Directed is a perfect choice because you:

  • Benefit long-term, buy-and-hold investors
  • Enjoy empowerment for beginners and intermediate investors
  • Value strong customer service
  • Plan for retirement
  • Align with ESG/SRI values
  • Seek professional guidance
  • Embrace mobile-first investing

Who Merrill Edge Self-Directed Is Not Right For

If this list relates to you, you should consider alternatives to Merrill Edge Self-Directed:

  • Look elsewhere if you require advanced order types, direct market routing, and high-speed execution capabilities
  • Note that Merrill Edge’s product lineup is more limited compared to some competitors
  • Pass on if you are an advanced options trader
  • Rethink if you are an international investor
  • Choose another broker for commission-free options trading
  • Look elsewhere if you need fractional share trading
  • Seek other platforms for algo trading

Interactive Brokers vs. Merrill Edge Self-Directed: Main Differences

Interactive Brokers wins for advanced and professional traders, high-volume trading, global market access, options and futures trading, and extensive product offerings.

 

Interactive Brokers

Merrill Edge Self-Directed

Ideal For

●       Advanced and professional traders

●       High-volume traders

●       Global investors seeking access to international markets

●       Options and futures traders

●       Algo traders

●       Investors seeking a wide range of products

●       Margin traders looking for low rates

●       Bank of America customers

●       Long-term, buy-and-hold investors

●       Beginners and intermediate investors

●       Investors seeking strong customer service and educational resources

●       Retirement planners

●       ESG/SRI investors

●       Investors who may want varying levels of guidance

Pricing

●       Offers two pricing plans: IBKR Pro (tiered and fixed) and IBKR Lite

●       IBKR Pro Tiered: Commission rates decrease with higher monthly trading volume

●       IBKR Pro Fixed: $0.005 per share with a $1 minimum and 1% maximum of trade value

●       IBKR Lite: Commission-free stock and ETF trades

●       Options: $0.65 per contract (IBKR Lite), tiered pricing available for IBKR Pro

●       Mutual funds: Over 19,000 funds available with no transaction fees

●       Margin rates: Among the lowest in the industry, tiered based on account size

●       No inactivity fees or account closure fees

●       $0 commissions for online stock and ETF trades

●       Options: $0 per-leg commission + $0.65 per contract

●       Mutual funds: $19.95 for funds outside the No Transaction Fee program

●       Fixed income: $1 per bond for secondary issues, no charge for new issues and Treasuries

●       No inactivity fees

●       $49.95 fee for full account transfers out

●       Margin rates: Not publicly disclosed, but generally higher than Interactive Brokers

Integrations

●       Limits integration with external services

●       Offers API access for custom integrations and algo trading

●       Lacks integrated banking services

●       Integrates with Bank of America banking services

●       Offers of Bank of America’s Preferred Rewards program, offering additional perks for combined balances

●       Offers integration with Erica, Bank of America’s AI-driven virtual financial assistant

Standout Features

●       Access to 150 market centers across 34 countries and 27 currencies

●       Use advanced Trader Workstation (TWS) platform with extensive customization options

●       Offers wide range of tradable securities including stocks, ETFs, options, futures, forex, and cryptocurrencies

●       Includes sophisticated order routing technology for best execution

●       Incurs low margin rates

●       Presents strong options trading tools and support for complex strategies

 

●       Integrates with Bank of America accounts

●       Provides robust research offerings, including proprietary and third-party research

●       Leverage on the Idea Builder tool for thematic investing, strong ESG/SRI research and analysis tools

●       Access to professional guidance and managed portfolio options

●       Provides extensive educational resources

●       Provides in-person support available at Bank of America branches

Interactive Brokers vs. Merrill Edge Self-Directed: Standout Features

Interactive Brokers stands out with its comprehensive global market access, advanced Trader Workstation platform, low-cost structure for trading and robust portfolio analysis tools.

Interactive Brokers

  • Provides Global Market Access: Access 150 market centers across 34 countries and 27 currencies, allowing you to diversify globally and seize opportunities in markets worldwide from a single integrated account.
  • Utilize Trader Workstation (TWS): Leverage one of the most powerful and customizable trading platforms available. Enjoy advanced charting, real-time streaming data, risk management tools, and multi-asset class trading. Tailor the platform to your preferences, ideal for sophisticated individual investors and institutional traders.
  • Use IBot: Navigate the platform, find information, and place trades using natural language commands with this AI-powered digital assistant, available across IBKR’s platforms. Streamline your experience, especially if you’re new to the platform.
  • Employs Advanced Order Types and Algos: Benefit from a wide array of order types and algorithmic trading strategies, including sophisticated bracket orders, multi-contingent orders, and various execution algorithms designed to optimize trading goals.
  • Take Advantage of Low Margin Rates: Enjoy some of the lowest margin rates in the industry, tiered based on account size. Larger accounts benefit from even lower rates, making IBKR particularly attractive for frequent margin traders.
  • Analyze with Portfolio Analyst: Aggregate all your financial accounts (even those not held at IBKR) for a holistic view of your finances. Get detailed performance reporting, risk analysis, and identify opportunities for portfolio optimization.
  • Aligns Investments with Values Using IMPACT App: Set up to 13 impact criteria and find investments that match your preferences while avoiding those that don’t meet your standards.

Merrill Edge Self-Directed

  • Integrate with Bank of America: Seamlessly manage your banking and investment accounts in one place if you’re an existing Bank of America customer. Simplify your overall financial management.
  • Benefit from Preferred Rewards Program: Enjoy perks like reduced fees, higher interest rates on savings accounts, and credit card bonuses based on combined balances across Bank of America and Merrill accounts.
  • Discover Opportunities with Idea Builder: Use this innovative tool to find investment opportunities based on ideas and themes, combining various research sources into a visual and personalized experience.
  • Understand Investments with Stock Story and Fund Story: Get comprehensive, easy-to-understand overviews of individual stocks and funds. Access data from multiple sources, including analyst ratings, fundamental data, and ESG scores.
  • Analyze with Portfolio Story: Breakdown your portfolio, including sector allocations, performance metrics, analyst ratings, and MSCI ESG scores. Ideal for newer investors wanting to understand their portfolio composition and alignment with investment goals.
  • Access In-Person Support: Get help from financial advisors at Bank of America branches, beneficial for those who occasionally want face-to-face guidance.
  • Focus on ESG/SRI: Evaluate investments from a socially responsible perspective with MSCI ESG scores. View ESG ratings for your entire portfolio and individual holdings.

Interactive Brokers vs. Merrill Edge Self-Directed: How to Open an Account with Interactive Brokers

  • Gather your documents
  • Visit the website
  • Fill in personal details
  • Create username and password
  • Confirm email
  • Complete a trading experience survey
  • Select an account type and choose a base currency
  • Fund your account

Interactive Brokers vs. Merrill Edge Self-Directed: How to Open an Account with Merrill Edge Self-Directed

  • Provide verification of your identity and residency using supporting documents
  • Visit the website and click on “Open an account”
  • Select an account type that aligns with your financial goals and preferences

Interactive Brokers vs. Merrill Edge Self-Directed: Pros and Cons

For its versatile nature, Interactive Brokers takes the lead.

  • Trade on 150 market centers across 34 countries and 27 currencies, providing unparalleled opportunities for global diversification and trading.
  • Invest in stocks, ETFs, options, futures, forex, cryptocurrencies, and more, all from a single integrated platform.
  • Utilize the powerful and customizable Trader Workstation (TWS), suitable for both sophisticated individual investors and institutional traders.
  • Enjoy competitive commission rates, particularly for high-volume traders, and some of the lowest margin rates in the industry.
  • Rely on sophisticated order routing technology aimed at providing best execution and price improvement for trades.
  • Use the Portfolio Analyst feature for comprehensive analysis of all financial accounts, even those not held at IBKR.
  • Start investing with no minimum deposit requirements, making it accessible to investors of all sizes.
  • Be ready for the advanced features and comprehensive platform, which can be overwhelming for beginners.
  • Understand that while costs are generally low, the tiered pricing structure can be confusing, especially for new users.
  • Note that IBKR doesn’t support fractional share trading, which could be a drawback for investors looking to invest small amounts across a diversified portfolio.
  • Be aware that IBKR offers limited guidance for investors who may need help with investment decisions.
  • Note that IBKR lacks physical branches, unlike some competitors, which may be a drawback if you prefer in-person support.

Merrill Edge Self-Directed

  • Manage your banking and investing needs under one roof with deep integration between Merrill Edge and Bank of America.
  • Enjoy perks like discounted Guided Investing accounts, reduced ATM fees, and lower rates on auto loans and mortgages based on combined account balances.
  • Access high-quality proprietary research along with third-party analysis from respected sources like Morningstar and Lipper.
  • Use the intuitive web platform and mobile app, well-suited for beginner to intermediate investors who prioritize simplicity over advanced features.
  • Benefit from 24/7 phone support and access to financial advisors at Bank of America branches, enhanced by Erica®, an AI-driven virtual financial assistant.
  • Utilize the comprehensive Investor Education center with resources tailored to different experience levels and learning preferences.
  • Evaluate your portfolios from an ESG perspective, with MSCI ESG scores and reports for individual securities and overall portfolios.
  • Start investing with no minimum deposit requirements.
  • Note that Merrill Edge’s offering is more restricted compared to IBKR, lacking access to futures, forex, and cryptocurrencies.
  • Be aware that while Merrill Edge offers commission-free stock and ETF trades, its options pricing and margin rates are less competitive than IBKR’s, especially for high-volume traders.
  • Understand that the MarketPro platform, while functional, lacks some of the advanced features and customization options found in IBKR’s TWS.
  • Note that Merrill Edge does not offer fractional share trading
  • Know that Merrill Edge supports only basic order types, lacking the advanced conditional orders that active traders often require.
  • Be prepared for very low interest rates (0.01%) on uninvested cash balances.

Interactive Brokers and Merrill Edge: Customer Reviews

Interactive Brokers is frequently praised by customers for its low costs, extensive market access, and advanced trading capabilities. Active traders and professionals particularly appreciate the depth of features available in the TWS platform. However, some users report a steep learning curve and occasional customer service issues. Merrill Edge customers often highlight the platform’s ease of use, integration with Bank of America accounts, and quality of research. The Preferred Rewards program is frequently cited as a significant benefit for existing Bank of America customers. Conversely, negative reviews tend to focus on the limited advanced trading features and occasional technical glitches with the website or mobile app.

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Interactive Brokers and Merrill Edge: Competitors

Both IBKR and Merrill Edge face stiff competition in the online brokerage space. Here’s how they stack up against some key competitors:

  • TD Ameritrade: TD Ameritrade offers a wider range of products than Merrill Edge, including futures and forex, and provides the advanced thinkorswim platform, which is comparable to IBKR’s TWS. It also boasts strong educational resources and research tools. Recently acquired by Charles Schwab, this acquisition may lead to changes in offerings.
  • Charles Schwab: Charles Schwab offers a wide range of investment products and services, providing excellent research and educational resources. With the recent acquisition of TD Ameritrade, it is potentially expanding its offerings. Charles Schwab is also known for strong customer service and competitive pricing.
  • Robinhood: Robinhood is popular among younger investors for its simple, mobile-first approach, offering commission-free trading and fractional shares. However, it has a limited product range and research tools compared to IBKR and Merrill Edge. Additionally, Robinhood has faced controversy over its payment for order flow practices.

Pro Tips

  • Assess your trading style and experience
  • Consider your product needs
  • Evaluate costs based on your trading volume
  • Weigh the importance of research and
  • Assess platform sophistication needs
  • Evaluate margin trading needs
  • Consider customer support preferences
  • Evaluate mobile trading needs

Recap

Interactive Brokers and Merrill Edge Self-Directed cater to different investor needs and preferences. Interactive Brokers excels for advanced and professional traders who value extensive global market access, advanced trading tools, and low costs. It’s ideal for active traders, options traders, and those interested in diverse international investments.

On the other hand, Merrill Edge Self-Directed is better suited for long-term investors, especially Bank of America customers looking for seamless integration. It offers strong research support, a user-friendly platform, and access to Bank of America’s financial ecosystem. It’s ideal for beginners, retirement planners, and investors focused on socially responsible investing.

Ultimately, choosing between the two depends on your trading style, investment goals, and whether you prioritize advanced trading features or integrated financial services.

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