merge/promote/best team for my heroes?

Olivia, Hector, B!Lyn, and Reinhardt is a good team comp. Whether they are the best, I'm not sure, but they are all very useful as a team comp to counter some pretty major threats in general.

My team is Mae, Hector, Ike, and Ephraim at the moment, which is probably not the best team, but they are my strongest units.

For your Hectors, keep them and give them Distant Counter to units that can use it. It's a very valuable skill, so it's not exactly recommended to merge them. You have 2 additional Distant Counters for units of your choosing. That's a treasure, so give with care.

Ike also Heavy Blade, which is great for +Attk and hard hitting units, but it can be a hard skill to utilize. It's a nice skill in the right hands, but I've been merging my Ike's more than I like to admit really.

Ally and Summoner Support is solely up to you. Anyone can benefit from it, and I'd say anyone on your first page or 5* rarities can greatly benefit from it.

Fae is also a good unit. Not sure about her IV's since they aren't stated, but she can deal with a lot of blue mages with her resistance. Great magic soak.
You also have Effie I noticed. She is a good unit, and sports the highest Attack in game. You should raise her up if you can.
Sophie, Merric, Sheena are good niche units. They're not bad if built well.

I guess that's it. You have other units, but you should check out the hero pages and do some research of your own. It helps to be well informed. Have as many heroes as possible for Tempest Trials, Chain Challenges, Squad Assaults, and Arena Assaults. Definitely helps to raise lots of units.

Do not, do not, do not promote your Olivia. You have a few 3* copies of her. Raise them to 4* and start a 4* merge. It will save you a ton of feathers and you'll be as good as 5* after a few more merges.

For promotion, start with the 3 freebie characters (Anna, Alfonse and Shareena). Having all 3 5* and fully-built means you will always have an arena bonus unit. Raising your arena level will ensure a steady flow of feathers to continue building your roster.

You should also stop summoning colorless until your core roster is better built-up.

In terms of teams to run, Rein/B!Lyn/Hector/Olivia is fine until you get more comfortable using positioning skills. You would ideally stop using a dancer for arena over time, as their low BST hurts your score. Ike would ideally replace her. Hard to say for sure since we can't see IVs, but Nowi and Fae are also very strong and have high arena weighting. Fae really needs Lightning Breath+ to shine though.