The Chicago-based American Association of Individual Investors and Mercer Inc. of New York produce extensive annual price surveys of the discount-brokerage business. Sure, they’re still much cheaper than the full-service firms-Charles Schwab is, on average, about half the cost of a mainstream brokerage. But what’s striking is how complicated it is to figure out which the cheapest bargain broker is. For one thing, fees can fluctuate widely, based on the size of a trade that a customer makes. (Mercer surveyed 22 different transactions at 100 companies and still couldn’t figure out the definitive winner.) It also isn’t clear how much of your fee is gobbled up by services you may not need. If you don’t want to talk with an account representative or buy a mutual fund, for example, avoid the larger discounters. To provide those extra services, they have to pay more staffers. That adds to costs and raises fees. Other items not always reflected in the survey include extra charges for trades involving low-priced stocks and special discounts for consistently high-volume customers.
To figure out the best deal-or find out bow your discounter stacks up-call for a copy of AAII’s survey at 312-280-0170. Mercer can be reached at 800-582-9854. Here’s a preview. But remember, these figures are based on a single-stock purchase-in the following case, a trade of 100 shares at $50 each. New York’s Marquette de Ban, Co.’s fee for the trade is around $43. That’s just below the AAII survey’s average cost for the same transaction. (Schwab charges $55.) Aufhauser & Co. of New York and Los Angeles-based Pacific Brokerage Services charge, only $25 for those same 100 shares. The most expensive is New England Investments. Its price: $115.
