When in the fall of 1977 the world's biggest retail stockbroker -- Merrill Lynch, Pierce, Fenner & Smith Inc. -- introduced a multiservice account for public customers, the general reaction among other retail-oriented firms was a collective yawn. The Cash Management Account (CMA), as Merrill Lynch called it, combined some banking functions with an investment account. For a nominal yearly fee and a minimum commitment of $20,000 in cash and securities, the CMA offered free checking, automatic placement of idle cash in interest-bearing pools, instant loans, and a few other financial amenities, in addition to typical brokerage services.

The who-needs-it posture of houses like Bache Halsey Stuart Shields Inc., Shearson American Express Inc., Dean Witter Reynolds Inc., and E.F. Hutton & Co. proved well founded -- for a while.Burdened by systems so complex that Merrill Lynch filed for patents on three of them, the company wrestled for several years with the logistics and expenses of the monster it had created. In 1980, CMA was rumored to be still in the red, and many of the 200,000 customers were house accounts who merely had switched into the CMA.

But when 1981's year-end figures were revealed, the rest of the public-brokerage community blanched: Merrill Lynch's CMA now boasted 600,000 customers and assets in excess of $35 billion. Not only had the rolls suddenly tripled, but it was reported that 40% of the business was new to the firm -- much of it, one could surmise, crossing over from other brokerage houses. At one point that fall, Merrill Lynch was enlisting patrons at the rate of 10,000 per week. Simple arithmetic indicated that, far from inching along with a minimum balance, each customer averaged nearly $60,000 in equity. A subsequent study showed that within 90 days of signing up for a CMA, the typical enlistee had put in some $68,000.

These were statistics that set the rest of the retail pack salivating. By 1981 the public seemed to have finally realized that liquid assets could be earning daily interest at high rates with little risk. Merrill Lynch's forward-looking CMA, with its daily sweep of free credit balances into money funds, was just the ticket for an unsophisticated, busy investor.

Threatened by large shrinkages in public business, at least four more brokerage firms will have established multiservice accounts by the end of this summer -- E. F. Hutton (Asset Management Account), Shearson (Financial Management Account), Bache (Command Account), and Dean Witter (Active Assets Account). Essentially, they are unabashed imitations of the Cash Management Account. Each, however, has introduced a distinctive feature or two that, each firm hopes, will at least keep its customers from straying and its account executives content.

Anyone who maintains an ordinary brokerage account will surely want to examine these fresh variations. A potential signer-on should understand that although multiservice accounts are novel, they are not the "revolutionary" vehicles that some promotions claim. Rather, despite their seeming intricacies, they are little more than a collection of a margin investment account, a money fund, a charge card, and a checkbook. The most compelling reason to consider them is simply the convenience of having disparate functions gathered together under one roof and recorded on one statement. A self-sufficient investor who is moderately active in the stock market would probably be better off attending to his or her own account at a discount brokerage house, where savings in commissions may run as much as 80% of the full rate charged in multiservice accounts.

At the heart of the multiservice account is a standard margin setup. These broker-made loans are the basis for the borrowing power promoted by the new accounts, and they do not come cheaply: A firm's margin lending rate to public customers ranges from about 1 to 2 1/2 points above the published broker's call money rate, depending on the amount lent, and can easily exceed bank rates. As in any margin account, the securities are held in the street name whether or not they are borrowed against, which means that you can't take them away and put them in your own strongbox; the broker can use them for delivery against short sales.

The amount of credit available to the customer is based on the prevailing margin ratios as established by the Securities and Exchange Commission; at present a broker can lend one dollar for each dollar belonging to the customer (and up to four dollars in the case of bonds and government securities). The credit that is "extended" is collected by using the charge card or writing a check. A customer who is fully margined thus has no more available credit, and a fully margined customer whose portfolio has declined is subject to a margin call couched as a demand from the broker to pay off part of the loan.

Each of the five multiservice accounts devised so far involves a charge card. Merrill Lynch, Bache, and Dean Witter provide Visa; Hutton and Shearson issue an American Express Gold Card. But though it is convenient to be able to use a card to tap the credit in an account, actually any brokerage firm, including a discount house, will pay available credit out of a margin account on notice of only an hour or two. Some will even deposit the sum in the customer's bank.

Another lure is the nightly (or, for cash balances of less than $1,000, weekly) sweep of the account's float. All five offer a selection of money funds into which free credit balances are deposited automatically. The selection is among a straight money fund, a tax-exempt fund, and a government securities fund. Again, the annual fees (ranging from $30 to $100) and relatively high commission rates should be weighed against the fact that even discount brokers will automatically invest available cash. Also, an investor on his or her own can select a money fund, many of which have free check-writing privileges.

But then there are the blandishments. Not the least of them is the comprehensive monthly statement -- securities transactions, charge-card items, interest earned, interest paid, and checking transactions. Bache carries the all-in-one statement a step further, submitting a summary for the entire year as well. As far as such fillips go, Bache appears to have the edge. Through parent Prudential, Bache insures the cash and securities in each account for up to $10 million, versus the standard $500,000 coverage of the others. For well-heeled customers the extra coverage may be comforting, but practically speaking it's unlikely that any of these firms will be involved in liquidation. Bache also lavishes on each customer $300 worth of traveler's checks -- a $3 savings -- and has an order-by-phone traveler's-check service. Another Bache innovation is membership in Command Buying Service, a consumer comparison-shopping organization.

Apart from such cosmetics, plus the caliber of each firm's considerable investment research, there's not much difference among them -- a factor that is likely to keep Merrill Lynch's leadership well ensconced. Indeed, the firm's CMA product director, Michael J. Foley, is undismayed by the onrush of competition. "We see it as an opportunity," he remarks. "Look-alike products will expand the marketplace, and inevitably people will compare them to CMA. We invented the idea, and we have the experience and know-how."

Nevertheless, Merrill Lynch undoubtedly is feeling the pressure, some of it created by its own former employees who have since been wooed over to the competition. Foley has mounted an aggressive ad campaign and in the past 18 months has developed imaginative CMA packages for touring golf and tennis pros, who may not add many names, but who have piles of untended money. There are also special versions for trusts and pension plans.

Investment modes are changing -- slowly, as is Wall Street's wont -- and unless the latecomers can keep pace, they obviously will have to make more dramatic concessions. If investors turn to common stocks in the coming months, the race for customers will heat up in a hurry. One obvious element subject to revision is commission rates. But no firm is giving ground in this important area just yet. Insists Bache's James Settle, marketing director of the Command Account: "We're not going to market by way of price. We may increase the services, but we won't change the financial product."

If internecine warfare does develop among the five brokerage houses (with a few more sure to come), it won't be the only problem they'll have to contend with. Already the banking industry, although saddled by federal regulations, is mounting a challenge. Last February, for example, the Security Pacific National Bank, with more than 600 offices in California, began the country's first discount brokerage service offered by a bank. It skirts the restriction against a bank's giving investment advice by simply not giving any. As with any discount broker, securities transactions must be customer-directed. And, although banks are not allowed to pool investment money, customers can arrange for their cash reserves to be put into an outside fund. Others hot on the heels of brokerage firms are Bank of America, which has been negotiating with the discount firm of Charles Schwab, and, on the East Coast, mighty Citibank, also considering a discount brokerage arm. Thus, despite restrictive regulation (which goes both ways: brokerage houses can't act as banks), the line between thrift institutions and brokerage houses has become blurred.

But until the next phase settles in -- one from which the casual investor is sure to benefit -- a diverting pastime might be to play the float built into multiservice accounts to maximum advantage. Such a tactic would entail not using the Visa card, which in the case of these accounts is set up as a debit card and which does not extend credit on its own; a debit is made against the holder's brokerage account as soon as the charge is received. Thus Visa should be treated as an emergency cash reserve, and charges should be made through American Express, which not only is a true credit card but does not exact interest. In this way a free credit position can be stretched to as much as 60 days before the funds are called on to make payment. And by paying with a check from the broker's bank, 8 to 12 more days can be added before the check clears. It may not be precisely what the CMA and its ilk are primarily intended to do, but the unencumbered possession of someone else's money for a month and a half can make a noticeable dent in personal debt service.