Betterment vs. Merrill Guided Investing: Which Should You Choose?

Review our comparison and decide the best robo-advisor for your finances

Fact checked by Will Baker

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Betterment and Merrill Guided Investing are two robo-advisors that can help you with automated investing. Betterment is a legacy, standalone robo-advisor, while Merrill Guided Investing is a newer offer from a well-recognized financial brand. Both made our list of the best robo-advisors, with Betterment winning best for beginners, best for tax-loss harvesting, best for crypto portfolio selection, and best for cash management, while Merrill Guided Investing is the winner of best for education.

Betterment is a pure robo-advisor that has been adding features putting it in more direct competition with traditional financial firms. This includes more employer-focused plan offerings, as well as savings and checking features. Merrill Guided Investing is part of the Bank of America financial ecosystem, with the wider ecosystem including just about every financial account and service imaginable. A key difference between the two is Betterment’s all-digital robo-advisor versus Merrill Guided Investing and its more active management approach led by the Chief Investment Officer (CIO). We’ll dig deeper into these two digital investment management solutions to see which is a better fit for your portfolio needs.

Key Takeaways of Betterment

• Multiple portfolio strategies including core, ESG, innovative tech, and crypto
• Low $10 minimum to begin investing
• Tax-loss harvesting 
• Multiple goal-setting options

Key Takeaways of Merrill Guided Investing

• Actively managed portfolios attempt to outperform market returns
• 24/7 phone customer service and live chat available
• Accounts are integrated with Bank of America products and services
• Broad slate of educational resources, calculators, and tools for beginners through advanced investors

Account Setup 

Account setup is very straightforward at both Betterment and Merrill Guided Investing and can be completed online. Each robo-advisory platform enables users to view sample portfolios before funding an account. 

Betterment

To set up an account at Betterment, create a username and password and provide basic personal information, including your Social Security number. Complete a brief questionnaire spanning your goals, time horizon, and comfort level with investment risk. Betterment recommends an investment portfolio composed of a diversified mix of stock and bond ETF investments to align with your questionnaire responses. Users can view the suggested portfolio only after setting up an account. Fortunately, you don’t need to fund the account to view the portfolio recommendations. 

At Betterment, you can manually adjust the mix to make it more or less conservative or aggressive. Investors can also opt for fixed income, innovative tech, smart beta, or environmental, social, and governance (ESG) sustainable portfolios. Cryptocurrency portfolios are also available, for additional fees. You can start an account with $0 and can get started investing with Betterment with just $10.

Merrill Guided Investing

To create a Merrill Guided Investing account, input your name, phone number, and email address. Then, respond to a variety of questions to determine the account makeup. Topics covered include choosing an investment goal from among eight choices and assigning a cost and timeline to the goal. Create your funding assumptions and then choose your risk tolerance. Users can also answer several risk-related questions to inform their risk tolerance level. Finally, Merrill users select either a market-tracking portfolio or a sustainability ESG option.

Unlike at Betterment, Merrill Guided Investing allows users to create an account, view sample portfolios, and see potential financial outcomes without providing a Social Security number. To start investing at Merrill Guided Investing, however, you’ll need the $1000 account minimum.

Account Setup Verdict: Betterment

Both Merrill and Betterment allow potential users the opportunity to adjust portfolio allocations and read about investment choices and methodology before funding an account. Merrill Guided Investing gives you more of a view without creating a full account. That said, Betterment’s portfolio pages include sample holdings and full methodologies. Both these robo-advisors make it very easy to get started, but we give Betterment the nod here for having such a low account minimum.

Account Types

Betterment

• Individual taxable
• Joint taxable 
• Traditional IRA 
• Roth IRA
• 401(k) rollover IRA
• Simplified employee pension (SEP) IRA (for the self-employed and small businesses)
• Trust 
• 529 college savings plan (only available through an employer)
• Student loan management accounts (only available through an employer)
• Cash reserve and checking

Merrill Guided Investing

• Individual taxable
• Joint taxable
• Traditional IRA
• Roth IRA
• SEP IRA 
• SIMPLE IRA
• 401(k) to IRA rollover
• Uniform Transfers to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA)

Account Types Verdict: Tie

Both Betterment and Merrill Guided Investing offer the commonly used account types. An employer enabled 529 plan or custodial (UTMA/UGMA) account will only make a difference if you are looking for those specific account types.

Account Services

Betterment provides a variety of investment accounts, including high-yield cash and checking, through partner banks. Within the Merrill Guided Investing robo-advisor, the account services are limited to investment management and investment management with an advisor. As Merrill is a member of the Bank of America family, Merrill investors can access a range of additional financial services and cash management products.  

Cash Management

The cash management options at Betterment include a checking account and high-yield cash reserve, provided through partner banks. Since most robo-advisors lack two cash management products, this advances Betterment’s offers in contrast with other stand-alone robo-advisors. Features include a checking account and debit card with ATM fee reimbursement. The high-yield cash reserve account account offers among the highest interest rates available online at 4.25% (4.75% for new customers). Betterment doesn’t require you to hold any part of your portfolio in cash. As a goal target date approaches, funds will be moved more into bond equivalents but they can be sold and moved into a Cash Reserve account if you so choose.

Since Merrill Guided Investing belongs to the Bank of America family, users will find a variety of savings and checking products within the brand. The interrelationship between Merrill and Bank of America provides a powerhouse of financial and cash management solutions not available at the standalone Betterment platform. Merrill also keeps a portion of your portfolio in cash and that is put into a Merrill Lynch direct deposit program yielding a solid 4.42%.

Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.

Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.

Cash Management Verdict: Betterment

Betterment doesn’t keep your portfolio in cash at all and its fully invested approach will likely yield more returns over the long-term. Outside of this, Betterment provides you with tools to also manage your uninvested cash through the platform. This includes a high-yield cash account and a debit account with cash back options. Merrill Guided Investing has similar offerings in the larger Bank of America ecosystem, but Betterment’s are right in the platform.

Goal Planning

Both Betterment and Merrill Guided Investing enable goal setting for targeted financial planning. Each platform provides portfolios suited to specific time horizons and graphs with expected probabilities of reaching a goal. For a near-term goal, such as saving for a vacation in a few years, the asset mix will be conservative and tilt towards bonds. But a 35-year-old saving for retirement will expect a more aggressive asset allocation, with higher percentages allocated towards high-return, higher-risk stock ETFs and smaller amounts to bond ETFs and cash. 

Betterment

Betterment lists six goals from which to choose:

• Major Purchase
• Education
• Retirement
• Retirement Income
• General Investing
• Emergency Fund

Betterment forecasts your likelihood of reaching your goals based on your current savings and projected investment returns. You can inform this picture even more by linking external accounts for Betterment to integrate into those forecasts.

Merrill Guided Investing

Merrill Guided Investing presents eight goal choices, which can be labeled and customized:

• Retirement
• General Investing
• Home
• Education
• Family Support
• Special Occasion
• Travel
• Other 

The Merrill Guided Investing graphs show probabilities of reaching your goals based on investment amounts and varying market conditions. You can change the inputs to view the impact of distinct investment amounts, time horizons, and various asset allocations. The tools and calculators enable users to plan for various financial decisions, including retirement, college planning, and basic personal finance scenarios. 

Goal Planning Verdict: Tie

Both Betterment and Merrill Guided Investing are among the best robo-advisors for detailed goal planning. They take external accounts into consideration and use detailed approaches to give you a realistic picture of where you are and what you can do to get their faster.

Portfolio Construction

Both Betterment and Merrill Guided Investing construct investment portfolios that align with the user’s financial goals, age, and risk tolerance. Each provider depends upon the well-researched Markowitz modern portfolio theory which strives for the best returns for each given risk level. Each platform offers portfolios with varying risk levels from conservative through aggressive. Both Betterment and Merrill populate portfolios with diversified U.S. and international stock and bond ETFs. Neither platform includes real estate funds in their offers, while Merrill also includes mutual funds.

Where they deviate is that Merrill combines a human advisor element with a tactical asset allocation model. The Merrill strategy, in concert with the Chief Investment Officer, adjusts portfolios based upon market conditions in an attempt to outperform basic market-matching passive investment strategies, while Betterment offers more investment strategy portfolios than Merrill Guided Investing. Betterment added a value tilt portfolio in the last year that takes a programmatic approach to what Merrill Guided Investing is attempting to do by finding and investing more in undervalued firms.

Betterment

Betterment offers the following portfolio strategies:

• Core: Diversified global portfolio with stock and bond ETFs
• Innovative Technology: Includes high-growth tech companies like clean energy, semiconductors, and robots
• Broad Impact: Targets companies with strong environmental, social, and governance (ESG) criteria
• Climate Impact: ESG option, includes companies with lower carbon emissions
• Value Tilt: A portfolio that looks for companies that are undervalued and tilts towards investing more in them
• Social Impact: ESG option with a focus on companies working towards minority empowerment and gender diversity
• Goldman Sachs Smart Beta: Attempts to outperform the market with a focus on specific investment factors
• BlackRock Target Income: All-bond ETF portfolio for cash flow
• Sustainable: Crypto assets like Bitcoin (BTC) or Ethereum (ETH) that prioritize lower energy usage during validating and mining 
• BTC/ETH: Provides direct exposure to the most liquid and well-known coins
• Universe: Broad, all-in-one-crypto portfolio spanning the DeFi and crypto landscape

Merrill Guided Investing

Merrill Guided Investing’s portfolio options are:

• Market Tracking: Core option with diversified stock and bond ETFs and mutual funds
• ESG: Diversified stock and bond ETFs and mutual funds that meet sustainable environmental, social, and governance criteria

Portfolio Construction Verdict: Betterment

Investors who prefer an opportunity to beat the market through professional human investment management combined with computer-driven models might lean towards the Merrill Guided Investing portfolios. Those who prefer crypto, income portfolios, access to a high-growth tech portfolio, or are willing to try a rules based approach to unearthing value will find more options at Betterment. 

Available Assets

Portfolio Customization 

Both platforms allow users to adjust asset allocations and choose strategy portfolios. Neither choice allows individual stock trading. Betterment provides deeper customization options with the Flexible Portfolio option.

Betterment

More experienced investors might consider the Betterment Flexible portfolio. The Flexible portfolio starts with the Core option and offers access to additional asset classes such as commodities, high-yield bonds, and REITs. You select the ETFs and asset percentages. A portfolio analysis tool provides insights into the potential impact of your adjustments including risk and diversification scores. 

Merrill Guided Investing

Merrill clients can submit a request to delete an asset from the recommended portfolio. A
“reasonable investment restriction” will be considered by the Merrill Guided Investment committee, but acceptance of the request is not guaranteed.

Portfolio Customization Verdict: Betterment

Customization options at either platform typically have an impact on the portfolio’s diversification, risk level, and return profile. Betterment offers far more options than Merrill Guided Investing for tweaking your portfolio from the basic model.

Portfolio Management 

A key feature of all robo-advisors is portfolio rebalancing. Assets are periodically bought or sold to make sure the investments remain in line with the user’s desired asset allocation balance. Each platform offers 24/7 access to the website dashboard. Both Betterment and Merrill Guided Investing rebalance when new assets are added or withdrawn.

Betterment

At Betterment, when asset allocation percentages drift past 3%, the portfolio will automatically be rebalanced as long as your account meets the minimum balance threshold. This is the rules based approach that most people expect from a robo-advisor. Betterment also allows you to adjust automatic rebalancing so it only uses deposits and withdrawals rather than shifting automatically with the market.

Merrill Guided Investing

Merrill’s active management approach means accounts are not rebalanced on a predetermined schedule. Rebalancing may occur for various reasons. As is customary, portfolios will be rebalanced when asset allocation percentages deviate from the preferred percentages. Rebalancing may also occur in accord with the managers’ strategic tactical asset allocation decisions which are influenced by market conditions and other factors. Merrill will also consider external accounts that are synced when making portfolio recommendations.

Portfolio Management Verdict: Tie

Merrill Guided Investing has a very unique approach to rebalancing that does consider your external accounts. Some investors may prefer this to a rules based approach used by most robo-advisors. Betterment does this in the usual way for robo-advisors and gives you some additional tweaks to the process.

Tax-Advantaged Investing

Betterment

Tax-loss harvesting is performed on Betterment’s taxable portfolios. This automated process offsets realized taxable gains with the sale of securities with losses. This process can reduce total tax payments. Betterment has gone further into developing a robust tax-loss harvesting methodology than most robo-advisors, expanding it across Betterment accounts and maintaining full investment.

Merrill Guided Investing

The Merrill Guided Investing portfolios are managed with a nod to tax efficiency. The all-digital plan does not offer tax-loss harvesting. The company has signaled that it may be added in 2024, but it is still absent at this time.

Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors and is subject to certain conditions. Read more at https://www.betterment.com/legal/tax-loss-harvesting and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.

Tax-Advantaged Investing Verdict: Betterment

Betterment is our pick for best for tax-loss harvesting, so it is no surprise that it takes this category when Merrill Guided Investing lacks this key feature for taxable accounts.

Key Portfolio Management Features

Security

Both platforms provide the highest level of data security, encryption, fraud protection, and privacy. Betterment, through partner banks, and Merrill Guided Investing both protect your assets against firm bankruptcy or malfeasance with SIPC insurance. The basic SIPC insurance covers cash and securities worth $500,000, with a $250,000 limit for cash. 

Betterment

Betterment includes FDIC insurance for cash accounts through partner banks: 

• Cash Reserve accounts are eligible for up to $2 million ($4 million for joint accounts) of FDIC insurance ($250,000 insurance per program bank†). Subject to certain conditions.
• Checking accounts are FDIC-insured up to $250,000 for individual accounts and $250,000 per depositor for joint accounts (at nbkc bank, Member FDIC, and deposit network, subject to certain conditions).

Betterment is not a bank.

Merrill Guided Investing

All Merrill clients are eligible to receive excess SIPC coverage provided by Lloyd’s of London up to $1.9 million cash per customer. Merrill Guided Investing does not provide FIDC insurance, but you would get that through a Bank of America deposit account.

Security Verdict: Tie

Betterment and Merrill Guided Investing are both at industry standards. Your money is protected with either firm.

User Experience 

Desktop

Both Betterment and Merrill Guided Investing’s desktop platforms are easy to navigate, with access to most corners of the website with one click. The dashboards of each show assets, performance, and progress towards goals. Goals are easy to adjust from the desktop for each platform. Both platforms offer digital advice and feedback to help you reach your financial goals.

Mobile App

Users of both platforms will appreciate the mobile apps. Each firm has an iOS and Android mobile app and each has solid reviews. Betterment’s mobile app provides the same account overview as the desktop. Betterment mobile users can track progress, schedule deposits, amend goals, manage cash, and more.

Merrill Guided Investing portfolios can be accessed through the Merrill or Bank of America app. Users can access the dashboard, track activity, progress, and view market news, and deposit checks. Users of both platforms will find what they need on each mobile app. 

Customer Service

With 24/7 live customer service by phone and chat, Merrill is easier to contact. During weekdays, both platforms are accessible by phone. Both of these services provide access to financial advisors at a premium level. Betterment also provides advice packages starting at $299 with certified advisors.

Customer Service Verdict: Merrill Guided Investing

Merrill Guided Investing wins the customer support category by having 24/7 phone access.

Fees

Neither Betterment nor Merrill Guided Investing charges commissions. However, each of the underlying funds within the portfolios will levy its own low-expense ratios, which go directly to the fund management. 

Betterment

Betterment Digital requires $10 to begin investing but no investment minimum to open an account. Betterment Premium, with unlimited financial advisor access, requires $100,000 to begin investing. 

• Digital: 0.25% AUM for accounts worth $20,000 or more (or with a $250 per month auto deposit); $4 per month for accounts worth less than $20,000
• Premium accounts with unlimited financial advisor access: 0.65% AUM
• Crypto accounts: 1% AUM
• Cash accounts: No fee

Betterment Premium accounts require a $100,000 minimum investment. At Betterment, crypto investors pay 1% of the account balance as a monthly management fee plus trading expenses. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there is a fee discount of 0.10%. Crypto accounts are charged an annual fee of 1% plus trading expenses. Premium members with crypto accounts will pay 1.15% of the crypto portion of their portfolio. Discrete financial advice packages are available beginning at $299.

Merrill Guided Investing

As part of the Bank of America family, there are ways to reduce the Merrill Guided Investing fees through the Preferred Rewards program. The investment minimum for the Online offer is $1,000. For Online With an Advisor, the minimum is $20,000. This is an easier entry point for financial advice than the $100,000 minimum for Betterment Premium.

• Online: 0.45% based upon the prior month’s balance and assessed monthly 
• Online with an advisor: 0.85% based upon the prior month’s balance and assessed monthly; includes unlimited calls with a financial advisor

Fees Verdict: Betterment

On the surface, it is a simple decision of the 0.25% at Betterment versus 0.45% at Merrill Guided Investing. However, a quirk of Betterment’s fee structure results in $4 per month on accounts less than $25,000 that don’t set up a $250 auto deposit. These accounts will actually pay more in fees than with Merrill Guided Investing, but that vanishes as balances grow. Overall, however, Betterment is the lower fee option.

The Bottom Line

Investors in Betterment or Merrill Guided Investing can be confident in either portfolio for solid investment management. Both made our list of the best robo-advisors for 2024, but there are several key distinctions that might lead you to one platform or the other.

Betterment overall offers lower pricing and a greater variety of investment options. The Digital product is great for beginners, with a $10 entry point. Those seeking a variety of investment management strategies along with high-yield cash options for a reasonable fee might lean towards Betterment. The availability of low-cost financial planning packages for the digital user is a unique draw. On the negative side, you will need $100,000 to invest in Betterment Premium, which provides unlimited financial advisor access. Finally, if you’re seeking crypto, tech, smart beta, or income portfolios, then you’ll gravitate towards Betterment.

Merrill Guided Investing might be a good option for those who are members of the Bank of America Preferred Rewards Program, as that will lower the management fees. Also, if you’re seeking a robo-advisor with human advisors and a relatively low minimum, Merrill offers the option to work with an online advisor and that might work for you. Most investors will be comfortable with Merrill’s core and ESG sustainable investment portfolios. Whether the actively managed approach merits the higher fees is a personal decision. Finally, whether Merrill Guided Investing or Betterment is right for you depends upon your personal financial situation and preferences. 

What Is the Minimum Balance for Merrill Guided Investing?

A minimum of $1,000 is required for the Online option, while $20,000 is required for the Online With an Advisor option. The Online With an Advisor account includes unlimited calls with a financial advisor.

What Are the Fees for Merrill Edge Guided?

The investment management fees are 0.45% of assets managed for the Online option and 0.85% for Online With an Advisor. The fee reduction is available through the Bank of America Preferred Rewards Program.

Can I Lose Money at Betterment or Merrill Guided Investing?

Yes. When investing in financial markets, your account value goes up and down with the market value of the investments. If you sell with a drawdown in your account, you will lose money. Historically, over decades, the returns on a well-diversified portfolio have been positive. The portfolios constructed by both Merrill Guided Investing and Betterment are meant to show positive growth over time, but they can experience periods of negative returns depending on when they were funded and how the market has performed since.

Which Portfolio Is Best on Betterment?

The best portfolio on Betterment depends upon what you’re seeking. The Core is fine for most investors. If you’re in retirement, then you might prefer the Income portfolio. The Innovative Tech and Crypto aren’t replacements for a Core portfolio, only add-ons for additional diversification. The ESG choices are designed for users who want to align their investments with their values.

How We Review Robo-Advisors

Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known as robo-advisors, is a top priority of Investopedia. We used our 2023 consumer survey to guide the research and weightings for our 2024 robo-advisor awards. To collect the data, we sent a digital survey with 64 questions to each of the 21 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Jan. 8, to Feb. 9, 2024.

We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria to find the best robo-advisors. The score for each company’s overall star rating is a weighted average of the criteria:

• Goal Planning – 21.00%
• Portfolio Contents – 17.00%
• Portfolio Management – 17.00%
• Fees – 15.00%
• Account Services – 10.00%
• Account Setup – 5.00%
• Customer Service – 5.00%
• Security & Education – 5.00%
• User Experience – 5.00%

Additionally, during our 2023 research, many of the companies we reviewed granted our team of expert writers and editors access to live accounts so they could perform hands-on testing. Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors.

Read more about how we research and review robo-advisors.

Separately, our research team conducted a survey of 205 U.S. adults aged 18 to 72 who are current clients of one of 18 robo-advisors. While the information collected did not influence the development of our ratings model, it was instrumental in gathering the valuable insights published in Investopedia’s 2023 Robo-Advisor Consumer Survey.

Participants in our 2023 Robo-Advisor Survey opted in to an online, self-administered questionnaire from a market research vendor. Data collection took place between Aug. 30 and Sept. 15, 2023, with 11 video interviews conducted with volunteer respondents from Sept. 7 to Sept. 17, 2023. Multiple quality checks, including screeners, attention gauges, comprehension evaluations, and logic metrics, among others, were used to ensure only the highest quality responses were included.

The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns. Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.

We independently evaluate all recommended products and services. If you click on links we provide, we may receive compensation.