Content provided in partnership with

Business Services Industry

Falling for fees

Entrepreneur, Oct, 2002 by Jennifer Pellet

Commission-based trades have long been the norm in the brokerage account biz. But the crisis in investor confidence over the past year may change that. More and more clients are trading in their pay-per-trade accounts for fee- or asset-based accounts with annual fees.

Why the shift? Both recent market volatility and concerns about ethics and potential conflicts of interest are driving the trend, asserts Ken Evason, president and CEO of Milwaukee-based Jacobus Wealth Management, adding that tying fees to assets under management rather than the number of trades more closely aligns the interests of the client and his or her broker. "Clients are saying, 'We want somebody who is objective and doesn't have a stake in a particular judgment of recommendation,'" he explains.

Most Popular Articles in Business: Research and Markets : Tesco Plc - SWOT Framework Analysis; Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors; eBay made easy: ready to start an eBay business? These 5 simple steps will ...; Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...; Wal-Mart's newest distribution center opened last month near the southwest ...; More »

Making the switch from a transaction-based to a fee-based account may necessitate changing brokers. While large brokerages, such as Merrill Lynch and Morgan Stanley Dean Witter, offer both options, may boutique brokerages offer only one or the other. But before you make the move, advises Evason, be sure it's right for you. Fees typically range between .75 and 2.25 percent of assets, with larger accounts winning lower rates. "Most firms tailor fees to the level of assets under management and the services the client wants," says Evason. "To really benefit, an investor would need a portfolio of $1 million or more."

Business Services Industry

Falling for fees

Entrepreneur, Oct, 2002 by Jennifer Pellet

Find Research Guides for:

Find Featured Titles for: Technology

Most Popular Articles in Business

Most Popular Publications in Business