Investment Trends 2017 First Half Online Broking Report

From

Irene Guiamatsia

Key highlights from the Investment Trends 2017 Australia First Half Online Broking Report:

  • A strong All Ords run carries online investor numbers to five year high
  • Industry switching activity remains low, but is rising among frequent traders
  • Clients recognise the strengths of Bell Direct, CMC Markets and CommSec

In its thirteenth year, the Online Broking Report provides an in-depth study of the attitudes and investing habits of online equities investors in Australia. The latest edition – the 2017 First Half Online Broking Report – is based on a large-scale survey of more than 12,500 investors and traders conducted in May 2017.

A strong All Ords run carries online investor numbers to five year high

Australian online investor numbers are on the rise after stalling in 2016. The latest Investment Trends research shows 635,000 unique individuals placed at least one share trade in the 12 months to May 2017, up from 605,000 six months ago.

Underpinning this growth is a record 535,000 individuals who continued trading equities actively over the last 12 months.

“The recent strong performance of domestic equities appears to have encouraged many Australians to continue trading,” said Dr Irene Guiamatsia, Research Director at Investment Trends.

The Investment Trends monthly Investor Intentions Index highlights that Australian’s investment outlook has become increasingly volatile (see chart), which suggests participation is likely to continue to be highly reactive to market performance.

 

 

 

Industry switching activity remains low, but is rising among frequent traders

Industry wide, only 4% of online investors chose to leave their current broker for another in the last 12 months. Among eight major international markets studied by Investment Trends, Australia ranks among the lowest for switching activity.

“Australian brokers have among the most loyal clients compared to their international counterparts,” said Guiamatsia. “Low switching levels are in line with the rising client satisfaction levels observed in the last 6 months.”

Despite this positive result, switching activity among frequent traders – those who trade at least once a week, on average – rose slightly from 4% to 6%.

“Brokers can’t afford to rest on their laurels and must deliver a proposition that not only meets the needs of mum and dad investors, but also the more sophisticated, frequent trader,” explained Guiamatsia.

“Mobile platform functionality is among the fastest growing drivers of switching intentions at the moment, with the proportion of switchers who cite this increasing three fold in the last 12 months,” she added.

Clients recognise the strengths of Bell Direct, CMC Markets and CommSec

Investment Trends measured the satisfaction of Australian online investors with their primary online broker across 17 service categories, including their overall satisfaction. Across the industry, overall satisfaction increased for the first time since 2015, with 85% of online investors rating their main broker as either ‘good’ or ‘very good’.

While Bell Direct continues to lead in overall satisfaction, CMC Markets Stockbroking has the most satisfied clients for charting and website navigation, while the largest player, CommSec, leads in satisfaction with the mobile platform.

“Australia’s entire online broking industry is doing a very good job for its clients across a wide range of measures. No single broker dominates client satisfaction across all service categories”, said Guiamatsia. “With online investors using an average of 1.3 brokers each, there is fierce competition for primary relationships.”

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