In June 1999, Esearch sent out a survey on online investing to nearly 10,000 Internet users. Of the over 1,800 responses, 16% indicated they have an online brokerage account. 84% don’t trade securities online, and of these 63% don’t trade securities at all.

Of the respondents who trade securities exclusively online, 63% are between the ages of 25 and 44 years of age. Those who trade both online and offline are of similar age range with 67% being between 25 and 44 years old. Income level doesn’t appear to be a factor with online traders with a relatively even spread between those in the <$30K, $30-44K, $45-59K, $60-79K, and $80-99K income brackets. This doesn’t hold true for exclusively offline investors. 41% of these respondents had incomes between $45 to $79K – and only 53% indicated they were between the ages of 25 and 44.

65% of online investors rely on one brokerage firm for all their online transactions – even though 43% indicated they had been unable to trade at one time or another because their broker’s system was down. Most investors indicated they were "satisfied but things could be better" when asked about their overall satisfaction with online trading. 27% indicated they were "very satisfied" and would never go back to a traditional brokerage arrangement.

The top reasons people trade online are:

1. It saves time (76%)
2. It saves money (75%)
3. Ability to trade any time (66%)

Online brokerage users appear to have a high level of loyalty with their chosen provider. Only 18% indicated they had changed from one online brokerage service to another. A full 82% have never changed. Another behavior worth noting is indicated trading… 68% of online traders indicated they make more trades online than they would if they were using a traditional brokerage. 28% indicated they made twice as many trades. Only 28% of respondents indicated they make about the same amount of trades online as they would offline.

And when asked where they get the majority of their research for trading, most respondents indicated it came from Internet sites that offer trading advice (46%).

QUESTIONNIARE

1. Which of the following best describes you:8% I have an online brokerage account only - go to question 3
• 8% I have an online and off-line brokerage account – go to question 3
• 84% I don’t have an online brokerage account – go to question 2
  
  
2. Why don't you have such an account (please mark all that apply and then go to question 15)?
• 63% I don't trade securities at all
• 17% I have a traditional brokerage account with which I am very satisfied.
• 14% I don't trust the Internet security with this type of transaction.
• 6% My current broker does not support on-line trading.
• 13% Other
  
  
3. Since many on-line brokerages have experienced downtimes, some analysts advise people to have multiple brokerage accounts. How many different brokerages do you deal with?
• 65% 1
• 28% 2
• 5% 3
• 2% 4 or 5
  
  
4. How satisfied are you with on-line trading?
• 27% Very satisfied; would never go back to a traditional brokerage
• 52% Satisfied but things could work better
• 16% Neither satisfied or dissatisfied
• 3% Somewhat dissatisfied, I put up with
• 2% Very dissatisfied
  
  
5. Why do you use an online brokerage? (please check all that apply)
• 76% It saves me time (I don’t have to hassle calling/talking with a broker)
• 75% It saves me money
• 66% I can trade 24-hours a day (convenience)
• 54% I can trade quickly (as I see news hit)
• 7% other
  
  
6. How frequently do you use the research capabilities of your on-line brokerage?
• 16% Always before I make any trade(s)
• 46% Frequently, but not always
• 32% Seldom
• 6% Never
  
  
7. Do you make more trades on-line than you would if you were using a traditional (off-line) brokerage?
• 8% I make the same number online as I would off-line
• 4% I make fewer trades online than I would off-line
• 28% I make more trades online (up to 1 1/2 times more)
• 12% I make more trades online (1-1/2 to 2 times more)
• 28% I make over twice as many trades online as I would using a traditional brokerage
  
  
8. Have you ever been unable to trade because the on-line brokerage system was down?
• 51% No, this has never happened
• 43% Yes, less than 10% of the time
• 6% Yes, more than 10% of the time
  
  
9. Do you have a checking account capability with the brokerage?
• 26% No; not offered
• 38% No; I chose not to use the one that is offered
• 36% Yes
  
  
10. When using your online brokerage, have you ever had a trade go through at a price other than what was quoted when you entered the trade?
• 70% No
• 30% Yes
  
  
11. If yes to Q10 above, have you experienced (check all that apply):
• 17% A trade resulted in a MUCH HIGHER price than that quoted
• 17% A trade resulted in a MUCH LOWER price than that quoted
• 26% I’ve attempted to make a trade but it never went through
• 83% A trade resulted in a different price than that quoted, but the difference wasn’t significant
  
  
12. Have you ever used the brokerage customer support phone line?
• 40% No
• 43% Yes and it quick and easy
• 17% Yes and it was slow and awkward
  
  
13. Have you ever changed from one on-line brokerage to another (e.g. cancelled your account)
• 18% Yes
• 82% No
  
  
14. Where do you get most of your research for trading?
• 20% Friends and family
• 33% Traditional Publications
• 46% Internet sites that offer trading advice
• 1% On-line chat groups

Online brokerage services are gaining momentum as acceptable means of trading securities. The online investor has a different demographic profile than their offline counterparts and they indicate their trading activity is higher online than it would be offline through a traditional brokerage. Most get their investment research online at Internet sites offering this sort of information, but only 16% always use the research capabilities of their online service prior to making a trade. 38% indicated they seldom or never use the research services of their online brokerage.

49% of traders have experienced downtime at their online brokerage, but the inconvenience isn’t enough to make them change brokerage service or setup an additional account with another firm.

Esearch is an Internet market research firm specializing in data collection via email. The company has a database of thousands of individuals willing to participate in on-line surveys, including complete demographic information on all panelists. Individuals interested in becoming an Esearch panelist or companies interested in on-line research should visit www.esearch.com or email esearch@esearch.com.