Blogs & Comment

Online discount brokers and investors

There is a popular conception that investors with online brokerage accounts are day-traders or web-savvy, young adults dabbling with a few bucks. Actually, they are rather similar to investors at full-service brokerages according to J.D. Power and Associates. The consultancy surveyed 2,696 clients of online discount brokers in May and found:

  • average age: 50
  • household income of $100,000 or more: 35%
  • portfolio over $100,000: 43%
  • aggressive or moderately aggressive style: 45%

Probably the most surprising finding was that 84% of the online discount-broker customers concurrently use either full-service advisors, financial planners or other bank-based, wealth management services. This kind of makes the do-it-yourself investing movement look less significant than what we might have initially imagined?
Nevertheless, the move to online brokerage accounts is going gangbusters. There has been a big increase in openings, with one third of online investors reporting they have been with their primary firm less than 12 months.
There is more detail in J.D. Powers inaugural 2009 Discount Brokerage Investor Studyand a companion white paper. Of note is a ranking of online discount brokers by level of customer satisfaction: The top three are:

  • Disnat (owned by Desjardins)
  • RBC Direct Investing
  • ScotiaMcLeod Direct Investing