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Issue 2001-7 Friday, April 13, 2001








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  Online brokerage in the United-States: trading volume remains stable and customer service is ranked as the first customer satisfaction criterion  

The last study conducted by JD Powers & Associates, based on responses from a random American sample of nearly 8.000 online investors, reveals that despite a 20% decline in the online trading population, optimism is back among those who still invest money online.

The study mainly insists on the category of Internet users whose trading volume exceeds 60 trades per six months. Respondents that belonged to that category declared they did not intend to reduce their trading volume.

Even more interesting is the fact that 30% of users who visit online broking Web sites intend to increase their trading volume in the coming months when 58% think they will keep the same trading volume.

Only 12% of these users think their trading volume might decrease in the coming six months.

Despite the decline that took place in the American online trading population in the last few months, we notice that users who remained active in the online trading sector seem to have reached a sufficient level of maturity to adapt themselves to the present stock market decline.


This study is good news for American online brokers as, in addition to the decline in the online trading population, they're also faced with an increased competition among themselves.

According to the study, only 14 firms captured more than 92 percent of the whole market in August 2000. And yet, the same 14 firms do not capture more than 80 percent of the market today.

A 12 percent decline in only six months for these 14 top American online traders makes us wonder about online brokers and their real abilities to customize visitors.

To that matter, JD Powers notices that, much more important than discount prices offered by some brokers, the main element of satisfaction for online trading investors happens to be the quality of the customer service itself.

From the interviews that were made, JD Powers classified online brokers according to their customers' degree of satisfaction: Fidelity arrives first, followed by Schwab, Datek online, Scottrade and Morgan Stanley Dean Witter online.

Here is the list of their satisfaction criteria listed according to their importance:

  • Customer service: 26%.

  • Information and customer education: 19%.

  • Integrity and broker reputation: 19%.

  • Quality of the processing: 17%.

  • Portfolio management: 12%.

  • Fees and commissions: 7%.

We can notice that fees and commissions get a very low rank, compared to the rank obtained by customer service or even information.

It is interesting to notice that in this time of Stock Exchange instability, users who invest money online presently attach importance to value for money.

It seems that the battle of the prices, at least in the United-States, have become one of the least efficient competitive weapons… which happens to be rather good news for all "serious" online brokers.

Source : JD Powers

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