Financial Technology

Financial Technology

November 01, 2012

Phoenix Marketing International Releases Data on Study of Online Active Traders in 2013

Phoenix Marketing International recently announced the results of a quarterly study conducted on active traders, who on an average place anywhere from four to more than 10 online trades per month. Previous studies have indicated that traders tend to choose online trading platforms based on the brokerage firm that provides these capabilities.

The selection is also subject to the age of the active trader.

Furthermore, the kind of securities traded online and whether or not there is near-term opportunity for brokerage houses to boost account revenue are both subject to traders’ age.

In a statement, John Duggan, Phoenix VP of Sales and Marketing, said that, “Brokerage firms seeking to grow account assets and commission revenue from online active traders must consider traders’ age when developing their 2013 marketing strategies. Our historical data demonstrate that age has a substantial impact on active traders’ consideration of brands offering online trading platforms. For example, aggregated data covering Q1 2010 thru Q3 2012 shows that older traders awarded their highest consideration to only full service and discount brokerage firms.”

“Specifically,” he said, “active traders age 50+ gave highest ratings to Charles Schwab, E*Trade, Fidelity, TD Ameritrade, Scottrade, ThinkOrSwim, and WellsTrade.”

Age is another factor that is critical to the differences found among active traders with respect to the securities traded. Traders below 50+ in Q3 2012 were found to own individual equities which are different from employer-sponsored retirement plan and stocks of foreign companies that traded on U.S. exchanges.

These traders were also found to be the least likely to trade securities on margin, stocks of foreign companies that traded on foreign exchanges, as well as options and futures contracts, and were found to place 10+ online equity trades in a given month.

Near-term growth opportunities among traders under the age of 50 are also an age-specific difference among online active traders that brokerage firms need to consider carefully. The study findings indicated that in Q4 2012, this group showed greater inclination toward establishing a new relationship with a brokerage company; were keen on activating another trading account with their brokerage; were more likely to look carefully in-to brokerage companies providing capabilities primarily for active traders; and showed greater interest in contracting with a financial advisor.

When it came to picking up an opportunity for adding new account assets, 55 percent of active traders ages 50 and above were found with investable assets greater than $500K as opposed to 33 percent of younger aged traders.

The study clearly specifies that brokerage firms have to keep in mind that differences such as gender, household income and investment decisions among old and young traders are not differentiating factors, as both groups consider themselves self-directed investors.

Edited by Braden Becker

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