According to a new , “Brokerage Composite Online Rating of Effectiveness (CORE),” Ameritrade is the top online US Brokerage, ranking ahead of competitors including Fidelity, Scottrade, Harrisdirect, Charles Schwab, E-Trade and TD Waterhouse.
The study is based on fourth quarter 2004 data with rankings based on Jupiter Research’s proprietary scoring method that considers financial variables such as assets under management, number of accounts, and average daily trade figures, as well as taking various site traffic variables into consideration.
Jupiter Analyst Asaf Buchner told ClickZ Stats one surprise of the study is that HarrisDirect’s frequency results are surprisingly high. “This index measures how frequent their customers visit their site,” Buchner said. “Harrisdirect returned a very high measure, meaning that their customers come to the site very often – a few times a month. However, when it comes to actually executing trades they didn’t score very high.”
Ameritrade has a higher degree of “hyper-usage” (a high percentage of active traders) than its competitors. A high degree of customer minutes per month, or “customer-intensity,” as well as the firm’s overall results contributed to Ameritrade’s top billing.
At the end of June, Ameritrade announced it will acquire the US operations of online brokerage TD Waterhouse, a move that could jeopardize Ameritrade’s top status in the next report. The report says TD Waterhouse has a higher number of casual traders than Ameritrade.
The combined Ameritrade/TD Waterhouse online brokerage is still expected to trail behind Fidelity in terms of overall customer accounts.
Anointing Ameritrade as the top US online brokerage is in start contrast to a September, 2004, report from J.D. Power & Associates which ranked Ameritrade ninth out of 11 online brokerages. That online brokerage ranking was measured in terms of investor satisfaction. The reigning online brokerage firm according to J.D. Power is Scottrade, a position that firm has held for five consecutive years.
Jupiter’s Buchner explains the CORE methodology doesn’t include a satisfaction measure. “Rather we look at size [number of accounts, assets under management, number of unique visitors] and activity ]trade, minutes on the site, number of visits],” Buchner said. “Although in the long run, a firm cannot stay on the top of the index unless it maintains at least a certain level of satisfaction.”
The Jupiter study also looks at what matters most to different types of traders. Price was by far the leading response. Over half (54 percent) of more frequent traders and 42 percent of occasional traders (less that five trades per year) rank price as the issue that matters most.
Usability is second among regular traders at 34 percent, while only scoring 27 percent among occasional traders. Speed-of-execution is third for regular traders at 34 percent. Occasional traders rank quality of service at 33 percent.
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