LETTERS

What penny-pinching?

I was rather amused with your recent article (A nonprofit’s discount stock-trading should be perfect for penny-pinchers, Investment News, March 2) for a number of reasons.

First, how can Robert O’Hara of the National Association of Investors Corp. claim, “An investor making 100 trades a year would pay an average of $1.80 for each transaction on the platinum plan.” Excuse me, but if I paid the $200 annual fee for the platinum level, my cost should be at least $2 a trade ($200 divided by 100 trades) plus the 8 cents a share. Should the article read $3.80 a trade?

I consider myself a penny pincher and even at the $1.80 trade cost, it’s still too much for me. Plenty of blue chip firms offer their stock at no trading cost and pick up the postage besides! Granted, I may be required to purchase my first share via a discount broker ($12 via the Internet from Waterhouse), but I would come out ahead after my third purchase as compared to the NAIC plan ($3.80 times 3), without the same $3.80 cost every time I wanted to trade. Bottom line: The NAIC plan is NOT a penny pincher’s

delight.

In addition, I don’t like credit unions being able to compete against banks that pay taxes. Some level playing field!

It’s one thing to be in business for the little guy and provide a helping hand, but not when the profits from the credit union go to fat paychecks, new buildings and other perks for management of these organizations. When I first got involved with my credit union, I was given an annual rebate or dividend bonus based on the credit union’s expenses. They don’t do that any more.

The credit union pays poor savings rates besides. Thoughts of helping the little guy (a credit union’s reason for being in the first place) are long gone.

As for NAIC, the investment club I’m involved with dropped our membership last fall after six years. NAIC kept raising dues and fees on their low-cost plan, but cut back on service. Yet they built a nice new building, offered credit cards, long-distance calling service, etc. Timely processing of new accounts was poor. And when corporations like McDonald’s and Merck started to jack up fees on dividend reinvestment plans, NAIC, rather than fight, hid its head in the sand.

NAIC has lost sight of its members’ needs, concerns and desires. It could call itself a division of the American Association of Retired Persons, as its members tend to be retired folks and they have no interest in tech stocks, like our club members. Then again we are computer nuts and are from 30 to 40 in age.

Scotty Miller

President

Miller Financial Service

Plymouth, Minn.

Soft dollars unethical

A source is quoted as saying that eliminating soft-dollar execution would “basically grind the system to a halt” (Soft-dollar trades harder on pocketbook, InvestmentNews, March 16). I’m not sure what system is being referred to, but I think the only thing that would grind to a halt is a stream of questionable payments giving rise to unavoidable conflicts of interest.

We view soft dollar arrangements as unethical; they cannot coexist with our fiduciary responsibility to obtain best price and execution for our clients and are a prohibited business practice specifically set forth in our Compliance Manual.

If money managers want research, or anything else, they should pay for it.

Kevin Bernzott

President and chief executive officer

Bernzott Capital Advisors

Oxnard, Calif.

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