J.D. Power: Online Investing Still Going Strong
Wed Mar 27, 2:02 PM ET
Elaine X. Grant, www.EcommerceTimes.com
According to a new report by J.D. Power and Associates, most online investors are satisfied with their experience and are still optimistic, even in the face of a struggling economy.
A whopping 90 percent of the 10,344 online investors surveyed by J.D. Power said they plan to continue trading online. One-third of respondents are even planning to increase their trading volume, the report said.
According to Ellen Guion, senior research manager of investment services at J.D. Power and Associates, investors with smaller portfolios have been dropping out of the game, but those with larger trading accounts are in for the long haul.
Big Players
"The high-end people are really driving online investing right now," Guion told the E-Commerce Times, adding that the average online portfolio size has risen to about US$200,000.
Among high-end traders, 80 percent said they expect 2002 will be at worst an average year and at best a good one. As a result of general improvement in the economy and corporate earnings, as well as the widely held opinion among online investors that the tech slump is over, Web traders "do have a very optimistic outlook," Guion said.
Slow Growth
J.D. Power saw a mere 2 percent increase in new investors over the past six months, but that is an improvement over the September survey, when online trading was down 8 percent.
"We're seeing people trickling back in. It's showing the right direction, it's just not going in leaps and bounds," Guion said.
Online trading has declined among consumers 25 to 34 years of age but has risen for those over 55. The senior online investment population has doubled over the past year and now represents 25 percent of the overall online trading community.
More Cautious
Most online investors -- 70 percent -- have changed the way they invest online since September 11th, taking a more conservative approach and concentrating on diversifying their portfolios.
As a result, many investors have moved from using a single investing service to trading with multiple brokerage companies. In addition, online investors are more likely to place a portfolio with a secondary investment company than they were a year ago. The percentage of portfolios placed with such firms has tripled over last year's levels.
The survey also found that online investors are no longer as likely to consolidate all their investment account information on a single site.
Keys to Success
Most online investors cited information as the most important thing for a Web broker to provide, but other key factors included customer service, trade execution, Web site capability, core values and cost.
"Firms that have focused on information resources and customer service will continue to be on the right path, as these factors are still the key components of investor retention," Guion said.
In the survey, Scottrade ranked highest in overall customer satisfaction, followed by Merrill Lynch, Fidelity and Schwab. |
