Beginning in July, Prudential Securities will be tacking on a $50 annual account fee for a basic securities account. And the charge isn't sitting well with brokers.
"This is ridiculous," one senior Prudential broker says. "They just want everyone to go to a certain type of account system."
A Prudential spokesperson says the charge is for a basic securities account, and that the fee is waived for clients with a Command account, retirement account or managed account.
Reps say they can get the fee waived on larger accounts at the branch level.
"On any account of more than $250,000, I just go to my branch manager and tell him to waive it," says the senior Prudential broker.
That's easier than confronting some clients with it, according to reps.
"Do I need to add insult to injury by tacking on another [fee] when I'm charging $500 for a 1,000-share trade?" asks another Prudential broker. "All this when you can go on-line and trade for $50? They should be compressing, not increasing fees."
Merrill Lynch charges $40 for its general securities account and Salomon Smith Barney charges $50, according to spokespersons for the firms. Dean Witter, meanwhile, does not charge, according to a broker there.
Another thorn brokers are yelping about is the recent addition of a $5.25 "SEC fee" the firm is charging. "They are saying it's for the firm and for compliance. But this is just another way the firm is charging the client through us," the senior Prudential broker says.
A third rep points to Prudential Insurance as the driving force behind the fees. The insurer is "looking to demutualize and create more revenue-based streams--and every $50 goes right to the bottom line," he says. This rep also feels the firm is trying to force clients into the firm's central asset Command account, which they can have for $50 more.
Central asset accounts, as margin accounts, also bring in revenues through margin loans to clients and through the lending of securities.
Senior Prudential management executives would not comment on the fee issue, referring all calls to the firm's public relations office, which had no comment beyond confirming the $50 account fee.
A former Prudential Securities executive claims one of the problems at the firm is that "you have people in charge who have never written a ticket, so they're inclined to make decisions that favor the house, and have no idea of the ramifications on sales."