“Over the past 2-1/2 years, Richard Frostig has watched the value of his brokerage account shrivel to roughly $30,000 from about $120,000,” writes Ruth Simon in today’s Wall Street Journal.

“His broker, Charles Schwab, has an odd way of showing sympathy. It just slapped the Wilton, Conn., public-relations executive last week with a $30 per quarter ‘account service fee’ because he wasn’t doing enough trading.”

“Many investors who have watched their portfolios drop are now being asked to pay more for the privilege. To make up for a fall-off in trading, brokerage firms are raising a variety of costs for investors. The fees range from extra commission costs to higher fees for routine services.”

“Starting this month, Schwab customers who use brokers to buy no-load mutual funds must pay $25 per trade. Investors who have less than $10,000 in their brokerage account now pay a $45-per-quarter fee, a $15 increase for investors who have between $5,000 and $9,999 in assets. E*Trade Group and Fidelity Investments recently added $3 ‘order handling’ fees for customers who aren’t active traders. TD Waterhouse this summer boosted commissions by $3 to $17.95 for customers who have less than $250,000 in assets or make fewer than 18 trades per quarter.”

“While some of the most jarring fee increases have come from the discount brokers, some full-service brokers are also upping the ante. Morgan Stanley this year upped the annual fee for having an individual retirement account there to $40 from $30 and the yearly charge for a cash-management account to $100 from $80. UBS PaineWebber has raised the fee for maintaining a cash-management account to $125 from $85 a year, and the cost of shifting the account to another firm to $75 from $50. Beginning next year, Merrill Lynch will charge a $15-per-quarter fee for some households that have accounts totaling less than $20,000, or less than $5,000 in mutual funds.”

“The fee increases underscore how times have changed on Wall Street. During the 1990s, brokerage firms lured the little guy by offering cheap online trades. Now, the bull market is a distant memory, and many small investors sit frozen on the sidelines. At Schwab, for instance, average trading volume is off 68% from the stock market’s peak in March 2000.”