Soft-Dollar Brokers Underperform Other Types of Brokers, According to Study
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From a total trading cost perspective, soft-dollar brokers underperform most other types of brokers, according to a study
by two university professors. Most investors are willing to pay more in commissions when they use soft-dollars because they
believe they are getting additional services. However, the study reveals that if they thought higher commissions were the
extent of the additional costs, they are missing a big part of the picture. On average, a soft-dollar broker costs about ten
basis points more than a full-service broker. Plan Sponsor featured the report in its February 1999 issue.
© 1999 Cypen & Cypen
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