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Subject:  MY Opinion of the new fee structure Date:  6/12/2001  2:13 PM
Author:  slaramee Number:  3275 of 4958

Having read through the last month or so of posts here, it seems that I am not alone in my disdain for's new fee structure. I am liquidating my account today, and will request a check of the proceeds and cancellation of my account as soon as possible. My response is posted below for anyone interested in my opinion on these fees and their impact on my account.

Since there seem to be two views expressed here:
1. Why the fees/tactics/advertising/etc. are not worth keeping or fair, and
2.why we shouldn't complain over a company trying to make money),

I will tell you now that my response is along the lines of #1. For those that don't care for this opinion, I recommend you don't bother reading on. I am not interesting in starting or continuing this debate. I am posting my response to let others know how I dealt with B&H and of my disappointment with the change in their service.

I will be looking for new options as a beginning, small investor and have enjoyed to resources shared on this board. I am still chewing on this for now- maybe real DRIPs, maybe saving more money until I can afford a real index fund, or maybe saving enough to use my other discount broker and keep my transaction costs low.

-slaramee (Scott)

Here's my response...


To whom it may concern:

I am very displeased with the change in policy at (B&H) regarding the monthly activity fee of $6.99. I opened my account with B&H because of your low fees and the ability to purchase fractional shares. As a beginning investor, the prior per-trade fee was superior to any other discount brokerage within my purchasing ability.

With this change in your fee structure I can no longer justify keeping my account open. Essentially, the $6.99 monthly fee translates to $84/year. In order to keep my transaction costs low (under 5% annually), this would require investing approximately $1,680 per year.

As a beginning investor, the appeal of B&H WAS that I could purchase stock in low dollar amounts within MY budget. This monthly fee will eat into any good returns unless you purchase stock of greater than ~$1,680, since it will result in rather high transaction costs. For instance, if I invest in $50 increments (greater than your well-advertised $20 minimum), my total cost for stocks in a year is $600. Using the $6.99/month fee ($84 a year), this results in a trasnaction rate of a whopping 14% ($84/$600)! In simple terms, this means for me to make money investing this small amount, I would need to see after-tax returns of greater than 14% to see ANY profit. As a frame of reference, this is a very high rate of return to expect without taxes. Adding taxes in would require an even greater return, thus making the likelihood of achieving ANY gains even more improbable.

I am presenting you this example to illustrate that the current fee structure does not make good economic sense to beginning investors that do not have a lot of money to invest. Investors at B&H who do not invest a fair amount of money are NOT getting a good deal that you advertise because their returns are being eroded by this monthly fee structure. My example of $1,680 per year is based on a minimum needed to maintain a 5% annual transaction cost- this is not even a very cost transaction according to many financial sources I have consulted. I find this fact ASTOUNDING, since beginning investors have been prime targets in your advertisements and marketing. You profess that B&H is the answer to getting into the market at low cost. Under your previous fee structure, I agreed. But I think that any