PaineWebber reps are reacting favorably to InsightOne, a new nondiscretionary fee-based program that lets clients negotiate on price and service, and place an unlimited number of trades online.
For those with $100,000 to invest, the account, available since late September, charges a $1,500 minimum annual fee. For larger accounts, however, reps have the ability to discount the 1.5 percent maximum fee.
"It's a flexible system built around brokers," says a veteran PaineWebber rep on the East Coast. "This is the account I've been asking for over the past 10 years." The broker plans to review year-end statements to determine which clients would benefit most. Even clients paying somewhat less in commissions might benefit since an advisory fee is deductible against ordinary income, he notes.
While the firm insists this account is not intended for day-traders, the rep says it has helped him pull business away from discounters.
While there is no limit on the number of trades a client can place with InsightOne, the firm will charge brokers $14 per trade should the account assets fail to appreciate or if the fee percentage drops below a certain level.
InsightOne is similar to Merrill Lynch's Unlimited Advantage account, but a PaineWebber spokesperson says there are important differences. "We think it's simpler and more beneficial for clients to have an arrangement like this where flexibility is permitted based on the service levels they require."
Merrill's account also charges a lower fee for bonds. InsightOne does not. "There could be an incentive to choose one investment instrument over another based on the fee," the PaineWebber spokesperson says.--Nicole Coulter