PriceMetrix launches free equity commission guide

PriceMetrix Inc. is introducing a market-based commission guide today that financial advisers can use to determine what to charge for commissions on securities trades.
APR 25, 2010
PriceMetrix Inc. is introducing a market-based commission guide today that financial advisers can use to determine what to charge for commissions on securities trades. The tool is available free of charge on the company's website. Doug Trott, president and chief executive of the firm, said he is making the program available because he believes that many brokers are using outdated data to determine their commissions. “It's guidance,” said Mr. Trott, whose firm provides practice-management software to advisers. “If advisers look at it and they don't like it, they don't have to come back. But they might find it helps with dialogue with investors.” The company's new guideline was created based on reviewing more than 3 million transactions by advisers completed in 2008 and 2009. The commission guide shows a distribution of average commissions charged on principal amounts. For example, the average commission on a $20,000 trade is 1.5%, or $300. Mr. Trott believes that many brokerage firms use complicated formulas for determining commissions, and he encourages advisers to look at this form because it can be printed out on a piece of paper the size of a business card. The guide shows suggested commission rates on eight different principal ranges. “We want to try and improve the relationship between advisers and investors, and our thinking is, this helps us to be a reference. We don't believe you can get this information anywhere else. This will benefit the brokerage industry,” he said. He points out some advisers will charge more than the suggested guidelines and some will charge less. “If a rep is in high demand, they can charge more,” he said. “But some can offer discounts.”

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