Investors demand more features and services from online brokers: 2020 1H Australia Online Investing Report

From

Recep Peker

Specialist researcher Investment Trends has released its 2020 1H Online Investing Report, an in-depth study of the preferences and behaviours of online equities and ETF investors in Australia.

Key highlights:

  • The active investor population surpasses one million for the first time
  • Investors demand more features and services from online brokers
  • ESG factors matter in investment selection
  • CommSec Pocket leads the industry in overall client satisfaction

The active investor population surpasses one million for the first time

Buoyed by record levels of market volatility, the population of active retail online investors in Australia surpassed one million for first time. Between December 2019 and June 2020, the number of active online investors grew by 41% from 750,000 to 1.06 million.

“Australia is now home to over one million active online investors who have traded listed investment in the past year, driven largely by a record inflow of 265,000 first-time investors,” said Recep Peker, Research Director at Investment Trends.

“First-time investors typically consist of young Australians in the Zoomer or Millennial age group, but the pandemic-induced lockdown has accelerated these trends. This year, the vast majority of first-time investors are under the age of 40 (70%), which represents a significant shift from last year (51%),” added Peker.

“Many first-time investors were attracted by buying opportunities presented by the market sell-off earlier this year, while the ability to start investing with small amounts was also a catalyst for many.”

“But as the demographics of the industry evolves, there is now great responsibility on online brokers, product manufacturers and thought leaders to help investors navigate this uncertain investing climate,” explained Peker.

Investors demand more features and services from online brokers

An increasingly competitive landscape has given online investors greater choice of brokers and cheaper brokerage (or zero brokerage in some cases). Even so, most Australian online investors are prepared to pay their main broker to access more features and services.

“Low cost remains a strong driver for selecting an online broker, but the quality of service and support also matter,” said Peker.

“Industry wide, 63% of online investors are willing to pay their main broker for additional features, highlighting their demand for greater support. As the top of their wish list is stock research or more advanced analysis, tax tools and live pricing.”

“As price competition intensifies, online brokers will look to differentiate through the breadth and depth of their offering. Importantly, online investors themselves are willing and prepared to pay for additional services they believe will add value to their trading experience,” explained Peker.

ESG factors matter in investment selection

A significant proportion of online investors are applying ‘Responsible Investing’ principles to their investment decisions – by considering the impact of ethical, environmental, social and corporate governance (ESG) factors when selecting investments.

Specifically, a quarter of investors (24%) said they had bought or sold investments based on environmental impact. Many have taken action by considering ethical and corporate governance factors (17% each, respectively), while 9% took social issues into account.

“There is strong appetite for investments that demonstrate good ESG standards, and the desire for investors to align their investments to their values, goals and aspirations is notable across all age segments (see chart),” said Peker.

 

 

CommSec Pocket leads the industry in overall client satisfaction

Each year, Investment Trends measures client satisfaction with their main online broker across 19 key service areas, including their overall satisfaction. For the first time, CommSec Pocket has clinched top spot in overall satisfaction with 57% of clients rating it as ‘very good’ overall. Stake (47%) and SelfWealth (40%) round out the top three.

About the report

This report provides a detailed analysis of the Australian online broking market, examining attitudes, behaviour and product usage among active online investors.

Based on a survey of 16,870 investors and traders, the Investment Trends 2020 1H Online Investing Report is the largest and most comprehensive independent study of the online stockbroking industry in Australia.

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