The online trading industry is losing established investors faster than it can replace them with new traders, fueling efforts by online investment firms to provide aggregation services to retain and attract traders, according to a new study from J.D. Power and Associates.
The '2001 Semiannual Online Trading Investor Satisfaction Study', which surveyed 8626 online investors across the US, reports that the industry lost 18 per cent of established online investors in the last six months and saw only an 8 per cent increase in new investors.
Nancy Salk, director of investment services at J.D. Power and Associates, warns: "We're at a critical point in online trading where brokerage firms need to provide consolidation incentives to investors. With multiple brokerage usage on the decline - from 42 per cent of investors using more than one online firm down to 24 per cent in the last six months - the push for existing online investors to consolidate their accounts is becoming the strongest strategy for online brokerage firms to increase revenue."
According to the survey, forty-five per cent of online investors agree that aggregation would allow their brokerage firm to better assist them with their total portfolio strategy.
Scottrade ranked highest in customer satisfaction, closely by Brown & Co., Merrill Lynch, Schwab, T. Rowe Price, and Fidelity. "Firms that have focused on information resources and customer service will continue to be on the right path, as they are still the key components of investor retention," says Salk.
Where investors previously favored customer service as the prime contributor to overall satisfaction, information resources offered by the firm is now the key driver, followed by customer service, core values, Web site capability, cost, and trade execution.