Newspaper article THE JOURNAL RECORD

Investing at Bargain Rates Requires a Sharp Eye

Newspaper article THE JOURNAL RECORD

Investing at Bargain Rates Requires a Sharp Eye

Article excerpt

Just as in shopping for consumer goods, individual and family money managers often find that investing at bargain rates requires a sharp eye.

It's not always simply a matter of taking your business to a place that calls itself a low-cost operation.

That point is driven home by the latest annual survey of brokerage commissions conducted by Mercer Inc., a New York research firm.

Eighteen years after the first discount brokers began to appear, charging lower commission rates than the so-called full-service firms, Mercer says securities industry rates now appear to be dividing again, into three tiers.

At the top there's the full-service firm, where Mercer's survey found the average commission for 22 different stock transactions of varying size came to $239.

In the middle stand the "Big Three" discount brokers _ Charles Schwab, Fidelity and Quick Reilly _ with an average tab of $101 for the same trades.

Then there are the "deep discounters," lesser-known firms where the average commission was $53.

Over the past year, the full-service firms increased their rates by an average of 7 percent to 10 percent, Mercer reported, while the Big Three discounters raised theirs by an average of 2 percent.

But the deep discounters, as defined by Mercer, lowered their rates by 6 percent.

"In many cases, we are seeing commissions which are lower than our first survey in 1983," said Mark Coler, Mercer's president.

"Continuing a trend which began in 1991, we are also seeing an increase in the number of new discounters. Eleven of the 90 deep discounters in our survey this year are new."

At the same time, the survey found that some discounters are offering increased services, such as asset-management accounts and automated trading.

These brokers evidently are convinced that the broad range of their customers isn't looking just for a price break, but for a package of benefits that might justify a somewhat higher level of commissions.

But from a strictly cost-conscious point of view, it is apparent that conditions keep shifting in the marketplace. …

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