Online Brokerage Providers Face Challenges In Attracting Active Traders

Nearly a third of Active Traders, investors who make three or more trades on a monthly basis via a self-service online trading platform, indicate they are likely to open a new online trading account in the next six months. While this group of investors recognizes 19 online brokerage providers, only six firms have a solid opportunity to gather new accounts.

While brokerage provider consideration criteria varies by trader segment, firms that can clearly demonstrate and support perceptions of a “superior trading platform” are most likely to attract Active Traders. Traders are very savvy and are seeking relationships with firms that can offer best-in-class trading technology, tools and support. While firms like E*TRADE, Charles Schwab, Fidelity Investments, and TD Ameritrade are most likely to be associated with this attribute, smaller providers like FXCM, Cobra Trading and Interactive Brokers are also likely to be identified which highlights the fact that no one firm truly owns this brand trait.
 
In addition to differentiating on “superior trading platform,” firms must also communicate key advantages in research/analytic tools and pricing structure. Emphasizing key strengths in these areas is important to both prospective and current clients, especially given that nearly one-third of Active Traders did not place their existing provider in their future account provider consideration set.
 
There is a huge opportunity for firms that can clearly communicate their key points of platform differentiation and superiority relative to competitors – however, many firms are missing the mark in reinforcing their status as a leading edge trading solutions provider among existing clients.
 
Combined, these insights indicate that firms serving the Active Trader community must continually innovate and communicate core competencies to attract and retain this elite group of investors.

Source: Cogent Research, The Active Traders™: 2012