Discount Brokers Add Frills to Grab Investors

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Unlike a few years ago, when discount brokers were mainly ''no-frills'' enterprises -- offering little more than stock trading at low commission charges -- discount brokers increasingly offer a full platter of programs to lure customers away from full-service investment houses.

The menu of services discounters present often includes free checking, 24-hour accessibility, your own account representative, automatic dividend reinvestment plans, investment seminars, and automated quotes and trading by telephone, computer, or fax.

''Our goal is to match high tech with high touch,'' says Tom Taggert, a Charles Schwab spokesman. For example, simply by pressing a few buttons on your touch-tone phone, you can quickly buy or sell stocks at a low commission charge through a Schwab office.

Discount brokerage houses first appeared in 1975, when federal regulators allowed ''no-frills'' trading for retail customers. Discount houses, stock experts say, are useful for investors who know which stocks or other investment products, such as mutual funds, they want to buy. But since discount houses traditionally do not offer investment advice -- as do full service houses such as Merrill Lynch & Co., or A.G. Edwards & Sons -- they have not been as useful for novice investors.

But the larger discount brokers are also offering new services to ward off heavy competition from so-called ''deep discounters.''

Deep discounters tend to provide fewer services than major discounters, particularly the ''Big Three'' -- Charles Schwab, Fidelity Brokerage Services, and Quick & Reilly Inc.

But, on average, deep discounters provide much lower commission charges, says Mark Coler, president of New York-based Mercer Inc., which follows discount brokers.

According to a new survey by Mercer, the difference in commission charges between the three major categories of brokerage houses has widened in the past year. Full-service brokers charged an average commission of $246 per trade in 1994, compared with $102 at the ''Big Three'' discount houses, and $50 at deep discount houses. ''More sophisticated technology,'' Mr. Coler says, enables discounters ''to continue to lower commission costs.''

One ''frill'' Charles Schwab offers its customers is the capability and convenience of buying mutual funds through their own Schwab accounts. If the fund is a ''no-load'' fund, there is no transaction charge, just as if you made the purchase directly from this type of mutual fund. Schwab now offers more than 1,000 mutual funds, including 340 no-load funds from some 40 families of funds.

In considering discount houses, be aware of special fees or restrictions. Schwab requires a minimum investment of $1,000 before you can open an account. Quick & Reilly does not require a minimum dollar amount on accounts. On the other hand, Schwab has 208 offices in the US, compared with Quick & Reilly's 103 offices. And Quick & Reilly has a transaction charge of $25 on the no-load mutual funds.

Shop around for the lowest commissions. The discount houses provide detailed rate cards. Thus, Schwab's minimum commission charge is $39 -- except for the no-load mutual funds, of course. Quick & Reilly's minimum: $37.50; Fidelity's, $38.

In the case of an unknown ''deep discounter,'' offering extraordinarily low commission charges, experts say it may pay to first check with a national securities group or local better business bureau, before you hand over your money.

There are about 100 established discount brokers. But new firms are constantly being started up, some operating on a shoe-string out of seedy offices. Nor is litigation unknown in the industry. Investors are occasionally forced to seek recovery of assets through lawsuits. Such litigation can take months or years. Thus, some experts say, smaller investors should either use better-known firms, or, at the least, carefully check out the smaller houses.

If the National Association of Securities Dealers (NASD), a trade regulatory group in New York, has adverse information on a discount broker, it will let you know. The toll free number: 1-800-289-9999.