ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, March 12, 1996 TAG: 9603120122
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
Several stock brokerage firms with offices in the Roanoke region are among those ranked in a new study, released Monday, that compares their commissions and other fees.
The study was by the National Council of Individual Investors of Washington, D.C., a 5-month-old, nonprofit organization formed as an advocate on small-investor issues.
The group found up to a 638 percent difference in commissions among major brokerage firms and cited "dramatic and confusing" differences in the prevalence and cost of hidden fees.
The council scored full-service, bank-affiliated and discount brokerage firms on the basis of commissions, other fees, investment analysis or performance, and disciplinary history or compliance with any disclosures mandated by regulators.
First Union Brokerage Services, a unit of First Union Corp. of Charlotte, N.C., ranked first among the 10 largest bank brokerages.
Among the full-service brokers, A.G. Edwards & Sons ranked first, Merrill Lynch & Co. ranked second, Edward Jones & Co. was fourth, PaineWebber Group Inc. was sixth and Dean Witter Reynolds Inc. was seventh. No other brokerage houses represented in the Roanoke area were included in the study.
"Our findings really expose the fallacy of the assumption on the part of many small investors that all brokerage firms are about the same," said Gerri Detweiler, policy director of the council.
"In fact, there are enormous and little-known variations in commissions, fees, investment results and levels of improper conduct," she said.
The survey data involved an extensive review of hundreds of "mystery shopper" calls and dozens of insider industry reports, the council said. It contacted more than 75 brokerage firms, focusing on the 10 largest full service, bank affiliated and discount firms.
The organization said it did not rank the discount categories because of frequent commission and fee schedule changes.
The report said the gulf between the most expensive full-service brokerage firm's commission (PaineWebber at $177) and the cheapest deep discount firm's (Wall Street Equities at $24) was a whopping 638 percent on similar stock trades.
This was a margin of $153 for the identical transaction - 500 listed shares at $10 each.
On the other hand, the report said, the gap in cost between some full-service and discount firms is smaller than most investors may think. The difference between the least expensive full-service broker (Everen Securities at $130) and the most expensive firm among the discount brokerages (Charles Schwab at $89) was 46 percent or $41.
Discount brokers differed from each other. The most expensive commission among them was $89 at Charles Schwab, while the cheapest was Wall Street Equities at $24. This means that within the discount categories there was a price difference of 271 percent or $65 for identical transactions.
While most investors concentrate on commissions, the council found substantial variations in total fees. Some firms had a costly array of four or more fees for items such as postage and handling, late payments, wire transfers and low balances in the money market account, the study said.
The study revealed differences for the same fees. Of the 38 firms studied, 27 had no registration and delivery fees, while they ranged up to $25 at other brokerages.
Bank-affiliated brokerages tended to be cheaper than traditional full-service firms, the council said. The average commission for a full-service firm was $160.07 vs. the bank brokerage average of $101.32, a difference of 58 percent.
LENGTH: Medium: 69 linesby CNB