If you were looking for a perfect example of how the Internet is changing the financial world, you couldn't do better than Tuesday of last week. First, Merrill Lynch, the quintessential full-service broker, threw in the cyber-towel after years of vowing it would never go to online trading and said it would offer $29.95 brokerless online trades starting this summer. Meanwhile, E-Trade, the iconic electronic broker, announced it would become more of a full-service house by buying an Internet bank.

You've got to love it: Merrill Lynch offering a service that cuts out stockbrokers, on whom the firm is based. And dishing it up in such a hurried fashion that it didn't even tell the brokers first, or have a service ready to offer. Meanwhile, E-Trade, which started out offering bare-bones trading, is moving to offer more services. Merrill getting more like E-Trade and E-Trade getting more like Merrill is what's called convergence. Each is trying to get what the other has, the kind of competition that's good for us customers.

Merrill isn't the first full-service house to offer online trading -- Prudential Securities unveiled a $24.95 plan last month, and the likes of Morgan Stanley and DLJ have offered online trading through subsidiaries -- but the Thundering Herd is the leader of the pack. So look for virtually every full-service broker to stampede onto the Net.

The conventional wisdom is that Merrill's giving way marks the end of stockbrokers as we've known them. That this is yet another example of how the Internet is killing off intermediaries, now that so much information is available on the Web. Want to book an airline ticket? Go online instead of using a travel agent. Want a mortgage or a car loan? Forget loan officers; shop online. Looking for legal or medical advice? You don't need a lawyer or doctor; go to a Web site or chat room.

But let me beg to differ. With all due respect to the Web -- which I use heavily to research articles, talk with readers and sources, and tend my personal investments, not necessarily in that order -- the more information that's available online, the more valuable competent advisers and middlemen become. I'm not saying this because one of my kids is a doctor and another works at a full-service brokerage house. I'm saying it because there's a big difference between information and knowledge. Someone has to filter the information -- much of which may not be true -- and do something useful with it. The more information there is, the more choices there are, and the harder it is to make a decision. Online trading is fine if you know what you want to buy or sell and you're not worried about getting clobbered during volatile markets. But if you don't know what to do, a good, smart, honest broker -- which I happen to have -- is more important than ever. Anyone can book a full-fare ticket from New York to Chicago. When the going gets tough, though, a good travel agent can do things that online amateurs can only dream of.

But to survive, brokers and travel agents and other middlemen will have to step up their game. They'll have to do a better job -- and probably price their services differently, with one fee for advice and another for trading. Assuming, of course, that you can get the customers to pay for advice. Prudential Securities, for example, wants customers to pay an annual fee based on the size of the account and to pay only $24.95 for each transaction. "Execution is a commodity, but our real product is advice," says PruSec President Wick Simmons.

Now, let's look at E-Trade's $1.8 billion purchase of Telebanc. An astronomical price for a bank with nominal profits and only 70,000 accounts -- but then again, E-Trade is paying in E-Trade shares, which are also priced astronomically. Telebanc's problem is that while it's easy to gather deposits through the Net -- you offer federally insured accounts carrying higher-than-market rates -- it's difficult to invest the money at a sufficient spread above those high deposit rates. But E-Trade isn't looking to become a banker -- it just wants to be able to offer banking services along with brokerage, to attract as many eyeballs as possible.

The moral? If you're still reading, you've proved my point that middlemen can survive the Internet. I'm a classic middleman: I gather information from the Web and elsewhere, refine it, and present it to you. The Web has made biz writing a lot more competitive than it used to be -- but also a lot more fun.

Sloan is Newsweek's Wall Street editor. His e-mail address is sloan@panix.com.