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Brokerage Commissions
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Your point about the value of using a discount broker is very well taken, and reminds me to pay only for the brokerage services which I really need!

If I rely on a broker's research and investment advice, using a full-service firm may be worth the extra price I pay. Otherwise, I'm probably throwing money away (it wouldn't be the first time) if I don't use a discount broker. Even if I'm already using a discounter, I may still be paying too much unless I'm using a "deep-discount" broker. For investors like me who make their own decisions, the cost benefit of using a discounter has expanded steadily since fixed securities commissions were abolished 31 years ago. An estimated 20% of individual investors' trades are executed by discount brokers. Recently, that trend has accelerated. Full-service brokers, after hiking commission rates, have now also commenced charging a wide variety of "nickle-and-dime" fees, with even higher charges promised. Among the most popular wrinkles: a $50 annual "inactive" charge to clients who don't generate adequate commission revenues, and a handling fee for every trade confirmation you're sent ($4.85 at Merrill Lynch, $4.50 at Prudential Securities, and $3.85 at Smith Barney). Smith Barney also levies a $25 charge to hold stocks for customers, while Merrill Lynch charges $15 if customers want a custody account. Merrill Lynch also levies a $40 annual fee on standard accounts, even active ones. And what if you've had it with these little extra fees and you want to get out? You might even get clipped as you exit: Prudential Securities levies $50 if you want to transfer your account to another firm. Full-service, you say? These firms, which enjoyed one of their most profitable years ever in 2005, say new and higher fees are necessary to cover their rising back-office trade processing costs. "The only time you can get away with it" is in a bull market, said the chairman of Raymond James Financial, referring to the timing of adding fees. Adding insult to injury, many of those fees are considered miscellaneous deductions for tax purposes. You can write off expenses in that category only to the extent that their total exceeds 2% of your adjusted gross income. Few taxpayers qualify. By contrast, discount brokers levy few if any additional charges, and the commission gap between full-service firms and discounters continues to widen. Investors can save 40-80% or more on commissions when they go through discounters. What's more, there's no sales pressure from a commission-based sales rep; you deal instead with salaried order takers. Virtually all discounters handle stocks, bonds, and options. Many also trade mutual funds. Three major firms dominate the discount market: Charles Schwab, Fidelity, and Quick & Reilly. They offer name recognition, extra convenience, and the most services among discounters. Schwab and Fidelity often save you 50% on a trade. Quick & Reilly generally offers the lowest rates of the "Big Three." If you're willing to work with a smaller, deep-discount firm, you'll save even more in commissions -- possibly 80% or more. The lowest brokerage commissions have actually fallen over the last 10 years, thanks to intense competition among the deep discounters. Mercer Inc. (80 Fifth Ave., NYC, NY 10011 at (800) 582-9854 or 212-807-6800 in New York), which publishes Discount Brokerage Survey, offers a breakdown among the different categories of brokerage firms, based on a sampling of 20 representative trades. The 10 lowest-cost discounters charged $48 on average, vs. $76 for the typical discounter, $107 at Charles Schwab, and $218 at the typical full-service broker. Most discount brokers set commissions based on the transaction's dollar amount. Others use the number of shares traded. Examples: 2 cents per share ($75 minimum), 3 cents per share ($48 minimum). No single broker is cheapest for all kinds of trades. Brokerage commissions also vary widely among the deep discounters. Review your trades for a pattern to determine which discounter is likely to offer you the best deal most of the time. You might use different types of brokers for the lowest cost for a given type of trade. Sticking with a full-service firm, despite the higher cost, will benefit you in the long run if your broker feeds you profitable ideas. Some investors use a full-service firm this way, while going to a discounter when they implement their own ideas. A full-service broker might even cost less for some types of trades, such as foreign stocks, options, and some low-priced stocks. Some discount brokers offer special deals. Examples: 10% if you trade via Schwab's TeleBroker telephone service or its Equalizer computer software program; 10% rebates for active investors. You may need to consider other services too. Examples: a money market fund, check writing, and consolidating monthly statements. Although many deep discounters offer trading only, some include other services too, free or at an extra cost. Unlike full-service brokers, the major discounters encourage you to trade via personal computers. If you use margin accounts, compare discounters' loan rates. Here are some deep-discount firms you may wish to consider (assuming they are still operating business as stand-alone discounters):

Pacific Brokerage (800) 421-8395
First National Brokerage (800) 228-3011
Jack White & Company (800) 233-3411
Kennedy Cabot (800) 252-0090
Brown & Company (800) 225-6707
York Securities (800) 221-3154
Olde Discount (800) 626-7526
StockCross (800) 225-6196

Accounts at virtually all discount brokers are covered by the Securities Investors Protection Corp. for up to $500,000 ($100,000 in cash). Check before you open an account. Any firm you use should carry private insurance too. Note: Good order execution is ABSOLUTELY ESSENTIAL! Otherwise, you could easily "give back" your commission savings. With so many discounters around, you can afford to be pretty choosy.