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July 20, 2005
Consumer Satisfaction with Online Stock Trade Services

The 1990s were a time when the stock market was rapidly rising. During that prosperous time, companies in mutual funds, stock trading, and investment packed the TV with advertising. However, the trading world has become less vocal since the loss in consumer confidence and the sharp declines in stock values. In spite of this skepticism, the stock trade industry today is alive and well. In addition, the stock trade industry online has held up.

J.D. Power and Associates conducts a yearly online trading investor satisfaction study. This study is sent to nearly 5000 online trading company users across the U.S. Scottrade was voted number one by consumers in overall satisfaction, for the fifth time in a row, in 2004. Scottrade also received equally high marks in low cost of trades, efficiency of trade of trade execution, customer service, information resources, and website capacity. Ranked in order after Scottrade was BrownCo, Fidelity Investments, and Smith Barney Access. Since 2003, Smith Barney Access and Fidelity Investments gained significantly in ranking.

The cost of trading is the number one issue with consumers. This issue is followed by the availability of customer service. The ability to talk with a qualified broker over the phone or in-person at a local service center is important to approximately 60% of online investors. In fact, nearly 50% of online investors take go to a center to get in-person advice or to make a transaction ~ mostly a deposit. An in-person visit is rarely needed to resolve a problem or a complaint. Trade companies that were previously only present online recognize this important trend among its users and started to add branch offices in cities across the country.

It may be surprising to learn that online trading services have captured about 8% of households that have an Internet connection, which is up from 7% in 2003. People who were the first to leave the stock market during the turmoil of the 1990's are returning. This includes the demographic groups who have a lower tolerance for risk, are more conservative in general, or are under the age of 35. As young people, who are known users of the latest technology, return to the stock market, they should increase the percent of Internet users who use online trading services.

In addition to Scottrade, BrownCo, Fidelity Investments, and Smith Barney Access, the rankings continue with American Express, Charles Schwab, TD Waterhouse, Harris Direct, Ameritrade, Merrill Lynch Direct, and E*Trade Financial. However, the differences in satisfaction among the online trading companies not in the top three are not that great. Being lower in the rankings may only imply "does not really stand out" in J. D. Powers terminology and does not mean incompetence in any way.

Even if you're not absolutely ready to trade stocks, bonds, or mutual funds online, nonetheless visit these companies' websites. You can access articles for public viewing and other reliable financial advice that can aid you in making good decisions about your financial future.

Copyright 2005 Marion Cordola. All rights reserved.
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Marion Cordola is the webmaster of FWG Trade a leading on-line resource for anyone looking for trade information. For any questions, make sure you visit: http://www.fwgtrade.com/
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