Over 92,000 investors took part, making it by far the largest study of the online broking industry ever conducted. Among other insights, the survey reveals that Australian traders are the most loyal in the world, even though Australian brokers received only midrange client satisfaction scores on a number of key indicators. During the 12 months to December 2012, just 7% of Australian online share traders switched their main broker — fewer than any other market, and half the level of switching in Singapore.

Yet only 72% of Australians rated their main online broker as good or very good for overall quality of service, compared to 85% in the US and 88% in Germany.

“Looking around the world, there is generally a strong link between lower client satisfaction and higher levels of switching,” said Investment Trends CEO Mark Johnston. “But Australia bucks that trend.”

“Australian traders remain loyal despite only mid-range satisfaction across a range of measures, including customer service, value for money, trading ideas and strategies,” he said.

“At an industry level, Australian brokers ranked best in the world for online reporting of positions and transactions, and were second only to their US peers for web site functionality.”

“Nonetheless, our analysis shows Australian brokers still have some room for improvement before they match world’s best practice in every aspect of their service,” he said.

Vanguard US has the happiest clients in the world
At the country level, US brokers lead the way, with the highest average overall satisfaction scores.  Among the 14 service areas compared, the United States topped 11.  Singapore had the lowest overall level of client satisfaction, while Australia ranked third behind the US and Germany.

 “The US market is almost exactly 10 times the size of the Australian market,” said Mr Johnston. “Their brokers have been able to use that scale to provide a much wider range of products and a higher level of service than their global peers, while still remaining financially viable.”

Looking at individual brokers, US-based Vanguard ranked first, with the happiest clients in the world.

“Vanguard US excels due to its superb customer service,” said Mr Johnston.  They also rank third in the world for perceived value for money, and are highly regarded in most other areas.”

Australian brokers tended to be clustered in the middle of the pack globally, although the standout was Bell Direct, which ranked first around the world in two categories and eleventh overall.

“Our top rated broker, Bell Direct, is knocking on the door of the world’s 10 best online brokers,” said Mr Johnston. “Bell Direct leads the world in customer ratings on trading ideas and strategies, and on reporting of positions and transactions.”

Australians are still enthusiastic online share traders
Despite the impact of the GFC, Australians remain among the world’s most enthusiastic online traders. Five hundred and fifty thousand Australians, or 3.2% of the adult population, traded shares online last year, giving Australia a market penetration second only to Singapore. In contrast, the UK, with a population three times the size of Australia’s, has a market only one fifth larger, while France actually has fewer traders than both.

The Australian market is also the world’s most highly concentrated, with the top five brokers accounting for 84% of clients (measured by primary broking relationship). The largest online broker in Australia, CommSec, has an unequalled 49% share of primary relationships.

“CommSec is a uniquely successful firm globally,” said Mr Johnston. “No other online broker dominates its market the way CommSec does, with half the market by primary relationships.  The closest comparison is Phillip’s Stockbroking in Singapore, with a 31% market share.”

“CommSec also has a relatively low attrition rate compared to its peers,” he said.

“Combined with its mammoth market share, that helps to account for the low level of churn in the Australian market.”

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