E*Trade Brokerage Buying BrownCo -- Stay Or Go?

I've been a customer of BrownCo (originally Brown & Company) since 1993. They had the cheapest commissions then, and every few years they'd go down even further, till they finally were charging only $5 for online market orders ($10 for limit and stop orders). They were the deepest of the "deep discount" brokers.

I remember when I first applied for authorization for options trading. A week or so after mailing in the form, I was anxious to know if I'd been approved, and so called them up. A phone representative told me "Not yet, but we've given it to Mr. Brown and he should get to it pretty soon." Wow, was I impressed that the head of the company himself was taking such a personal involvement in the process. It was also a nice clue about the small size and corresponding lack of bureaucracy in the firm.

Later they were bought by J.P. Morgan, but mostly kept the "Brown" identity.

Then last year they announced they were being acquired by E*Trade. You can stay with them and become an E*Trade customer, or transfer your account to another brokerage. But if you want to avoid account termination fees, you need to let them know by April 28, 2006.

Well, for me, it's bye-bye Brown. They have guaranteed to keep the same commission schedule until the end of 2006, but after that you know they're going to raise them to the standard E*Trade commissions (currently $12.99 unless you have more than $50,000 in assets or make more than 29 trades in a quarter). The lowest rate is $6.99 if you trade 1,500 times in a quarter.

And Brown had no inactivity fees, nor any fees to make partial transfers out of the account. This is a function I've used several times, not only for simple moving things around, but also for charitable donations (in case you didn't know, there's a big tax advantage if you do your donations that way). But for a smaller account, E*Trade charges $40 per quarter inactivity fee, and $25 for a partial transfer out.

No, thanks. I'll transfer one account to Scottrade. I already have an account with them anyway, and their commissions are only $7, no inactivity fees, and no fee for partial transfers. They seem to be the current cheapest "deep discount" broker.

There there are the more specialized "super discount" brokers that cater to active traders, such as Interactive Brokers, which only charges $1 minimum commission. I actually use IB more than anyone else these days, and I'm transferring another BrownCo account to them. I still keep a Scottrade account for mutual funds, and also every now and then there's a stock I want to short that IB can't do for some reason (I guess they don't have enough shares). But Scottrade virtually always either has shares to short, or can get them from another broker if I call my rep.