HATS OFF TO MERRILL MOVE TOWARD WEB

Back in 1997, IBM chairman and chief executive Louis Gerstner Jr. told the Securities Industry Association’s annual conference: “Your entire industry will move to the ‘net.”

It hasn’t, of course, but the bulk likely will now that Merrill Lynch & Co. Inc. says it has seen the online light and will offer electronic stock trading for as little as $29.95.

This is good news.

First, trading costs will drop as other major brokerages chase Merrill. Second, the quality of financial planning — both inside and outside wirehouses — will only improve.

Merrill’s move to offer online trading means an estimated 20% pay cut for many of its 14,800 brokers. The challenge for them is to act less like brokers and more like full-service fee-based financial advisers who live off assets under management rather than the day’s hot trading tip.

The big houses have officially pushed this idea for years, but many brokers resisted. Now, resistance seems at the very least more costly — and possibly futile.

As these brokers begin to function more like financial planners, competition will force independent advisers to improve their service, too.

And there’s an unexpected lagniappe for the independents: The big boys’ long marketing coattails. Once the wirehouses step up their promotion of the concept of professional financial planning, more and more investors will see the need for skilled guidance. All financial planners can expect to benefit. Thank you, Mr. Merrill. Thank you, Mr. Lynch.

letters

Humor, not porn

You recently ran a delightful article by Jim Bogin (“Wish you Weren’t Here,” March 15) which eloquently described his hegira through some of the republics formed from the former Soviet Union. Mr. Bogin’s article provided both humorous and insightful observations about an area of the world unknown to most investors.

With dismay, I read a letter in your April 12 edition from R.M. Steward, who denigrates the article as the “sort of material (that) is offensive to professionals with a sense of morals and values and is better off in a publication like Playboy.”

Come on! This article was humorous rather than titillating, and provided real understanding into the way many Third World countries operate.

ROBERT W. BUTLER JR.

Roman Butler Fullerton & Co.

St. Louis

Wahooey

Re: “Cleveland Indians . . . great team, lousy stock” (InvestmentNews, May 3). I’m not convinced that investing in publicly traded baseball teams is the way to make money in the stock market.

Baseball is a capital-intensive business. Stadiums aren’t getting any cheaper; teams are scouting for new fields to play on every 10 to 12 years.

Then there’s the screwed-up business model. Most teams are not publicly traded. In this instance, though, we’re talking about the publicly traded Cleveland Indians with a market cap of $55 million. The average team payroll is $60 million to $70 million. Even if you sold your team last week for $250 million, a $60 million payroll in any business is full-fledged psycho-path.

I’m not going to even elaborate on the staged strikes by players from time to time, or the fan indifference. There are better businesses to invest in. You buy the stock, I’ll buy the baseball cards.

RONALD L. DELEGGE

Registered investment adviser

Skokie, Ill.

Grease trap

Buried deep in an April 19 article (“Big firms seeking to make their mark through CFPs”) was this little nugget: If a CFP pays Schwab $8,000 then Schwab will recommend them to their high-roller clients seeking advice. Is this “you pay us so we recommend you” deal ethical for Schwab? For the CFPs? Do either Schwab or the CFP disclose this to clients? It appears a tad greasy to me.

PETER TOLL

American Express Financial Advisors

Portland, Ore.