Dr Irene Guiamatsia
Leading research firm Investment Trends has released its 2018 First Half Online Broking Report, an in-depth study of the attitudes, behaviours, needs and wants of online equities and ETF investors in Australia.
The report is based on a large-scale survey of more than 11,000 investors and traders conducted in May 2018.
Online investor numbers soar to new records
The number of Australian retail online investors has surpassed 700,000 for the first time, according to the latest research from Investment Trends. As at May 2018, 720,000 Australians placed at least one share or ETF trade in the last 12 months, up from 645,000 six months ago.
“In the first half of 2018, the three engines of growth were firing on all cylinders,” said Irene Guiamatsia, Research Director at Investment Trends, highlighting the low dormancy, strong client reactivation and healthy inflows of new-to-market investors observed in the industry.
“The February market correction generated interest around the world for assets perceived to be undervalued, and Australian investors were no different,” explained Guiamatsia.
Switching activity remains low, intensifies among frequent traders
Across the industry, switching activity held steady at a low level, with only 4% of online investors moving to another online broker in the past 12 months. “The improved retention efforts of the Big Four brokers – CommSec, ANZ, Westpac and nabtrade – has kept switching to a minimum,” said Guiamatsia.
However, switching among the frequent trader segment (those who placed four or more trades per month) has risen significantly in this same period (9%, up from a low of 4% in November 2016).
“The frequent trader segment will continue to be a key battleground for online brokers,” added Guiamatsia. “Brokers that most effectively identify and respond to the needs of frequent traders will benefit.”
Mobile platform functionality is increasingly key for all demographics
Mobile platform functionality is an increasingly important differentiator in broker selection, with one in six online investors saying this feature influenced their choice of main broker, significantly more than just six months ago.
Mobile functionality is naturally more prominent among the millennial segment, but penetration among older demographics is also growing.
“Looking forward, mobile functionality is set to be a key battleground,” said Guiamatsia. ”CommSec has a first mover advantage and continues to dominate in this area, but brokers like IG and CMC Markets are providing strong competition.”
