Survey Finds Wide Gap in Amount of Commissions Major Brokerages Charge

Major brokerage firms charge widely disparate commissions for the same number of shares transacted at the same price, according to a survey released today by an advocacy group for small investors.

For a deal involving 500 listed shares at $10 each, PaineWebber Group Inc., a leading full-service brokerage, charges $177, the most expensive among 38 firms in the survey.

Wall Street Equities, a New York-based “deep” discount firm, collects $24 for the same transaction, the cheapest of the lot.

The gap in the commissions are among the highlights of the first Brokerage Firm Survey published by the National Council of Individual Investors, an independent group promoting small-investor causes.

“Our findings expose the fallacy among many small investors that all brokerages are about the same,” said Gerri Detweiler, the group’s policy director, who emphasized that investors should shop around before choosing a broker.

There are many big and little-known variations in commissions, fees, investment results and levels of improper conduct that average investors need to check, she said.

Using these yardsticks and a 100-point scoring system, the survey conducted between mid-November and early February ranked A.G. Edwards Inc., of St. Louis, the first among the 10 largest full-service firms, with 74 points. Merrill Lynch & Co., was a close second with 73 points. Coming in 10th was Prudential Securities, scoring only 24 points. The firm’s disciplinary history pulled down its score, according to the survey.

Among the survey’s key findings are:

* The gap in cost between some full-service and discount firms is probably not as big a money saver as investors may think. For the same 500 shares at $10 each, Chicago-based Everen Securities Inc., formerly Kemper Securities, charged the most, $130, while Charles Schwab Corp., the nation’s largest discount brokerage firm, charged the least at $89--a 46% difference.

* Disparity among what discount firms charge indicates “discount” covers a lot of ground. The commission charged by Wall Street Equities is $24 and $89 at Charles Schwab.

* Bank-affiliated brokerages tend to be cheaper than traditional full-service firms. The average commission price for a full-service firm for the same transaction was $160 against the bank-affiliated average of $101. Although PaineWebber charged $177, First Interstate Securities, a bank-affiliated brokerage, charged only $58.75.

* There are large variations in “hidden” fees and there are costly differences in the same type of fees. Wall Street Equities, Investors National Corp. and Olde Discount Stockbrokers impose a $25 registration and delivery fee. The same service costs only $15 at Merrill Lynch, Wachovia Investments, Key Investments, Charles Schwab, Fidelity Brokerage Services and PC Financial Network. However, out of the 38 firms, 27 do not charge any registration and delivery charge.

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Brokerage Breakdown

The National Council of Individual Investors’ first Brokerage Firm Survey of the top 10 full-service brokerage firms, based on a 100-point scoring system are as follows:

1. A.G. Edwards Inc., 74 points

2. Merrill Lynch & Co., 73

3. Everen Securities Inc., 65

4. Edward D. Jones & Co., 58

5. Bear Stearns & Co., 57

6. PaineWebber Group Inc., 52.5

7. Dean Witter Reynolds Inc., 51.5

8. Smith Barney Inc., 35

9. Lehman Bros., 31

10. Prudential Securities, 24

--Reuters