`Flat Fee' Accounts: Read The Fine Print

Brokers' no-commission offerings may have hidden charges

It has been a problem since the dawn of the retail brokerage business: Brokers have a strong incentive to get customers to trade when it might be in clients' interest to do nothing. Responding to criticism of this conflict of interest, many firms such as Merrill Lynch, Smith Barney, and PaineWebber have recently promoted "relationship" or "fee-only" accounts. Instead of charging per-trade brokerage commissions, customers pay flat annual fees for a set number of trades. That, say the firms, puts the broker on the same side of the table as the customer.

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