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Issue 2001-4 - Wednesday, March 7, 2001
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  62% of Americans who have a trading account do not seek advice on the Internet

62% of Americans who have a trading account do not seek advice on the Internet.

Uneven development of online trading activity. Online trading by Schwab customers plunged more than 14.3% in the fourth quarter of 2000.


American Express just released a survey conducted by Yankelovitch Partners and the results appear both interesting and surprising. The survey was carried out among a panel of Americans who do have a trading account.

If there is a country where online financial information is rich, abundant and most of the time free of charge, it is the United-States.

The country has countless first-rate sites, portals, eServices, and forums… and yet, the survey shows that 62% of the respondents, who do have a portfolio, do not use the Internet for financial planning information.
Among those who do use the Internet for financial information:


  • 25% use portals (yahoo! or MSN).

  • 20% use general online news sources (CNN or MSNBC).

  • Less than 10% use financial news sources (news, chat…).

Age and revenues also make some dramatic differences in how people are using the Internet for information.

As far as age is concerned:

  • 48% of those aged 18 to 34 and who have a trading account say they use the Internet for information.

  • 41% of those aged 35 to 49.

  • 20% of those aged 50 and plus.

As far as revenues are concerned:

  • 56% of those with incomes of $75,000 or more turn to the Internet for financial information.

  • 34% of those with incomes of $35,000 to $75,000.

  • 33% of those with incomes of $35,000 or less

And finally, this remains a very sexist attitude since men constitute 45% of those who use Internet resources for financial planning compared to only 31% of women. Come on, ladies, get a move on!

This survey happens to be very interesting for all the actors involved in the eFinance business but it also proves that it is not as easy as it seems to change the way people behave.

And yet, this is a very favourable situation:

  • People have access to rich and diversified information according to their tastes and needs.

  • Investors get first-class eServices that really help them manage their accounts on a day-to-day but also on a long-term basis.

  • It is almost always free to access these sites.

This is an almost perfect situation and it should have proved enough to make online financial services a success. But such is not the case as the survey shows that only 10% of Americans who have a trading account use financial news websites…

What on earth could prompt Americans to use these sites more often? Should we start paying them?

This is just one more proof that it is very easy indeed to overestimate the Internet potential to modify Internet usage patterns.

Source : American Express

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    Uneven development of online trading activity. Online trading by Schwab customers plunged more than 14.3% in the fourth quarter of 2000  

And yet, some of Schwab's brokerage rivals saw some rise in fourth quarter stock trading activity.

Schwab's model customer might differ from its brokerage rivals', that are more or less hit by the present crisis, and this fact might contribute to explain the differences between those sites.

This is how, in January 2001, trading was up 14% at Ameritrade, 6% at Datek, and even 6% at Schwab's CyBerCorp unit from December levels.

And yet, at Schwab itself, trading fell 5% in January 2001 from December 2000.

Longer term comparisons appear to be somehow more disturbing as daily trading activity since it slumped a 48% for Schwab from its March 2000 peak.

As it refused to lay off any worker, Schwab has taken a number of unusual steps: it asked employees to take unplanned vacation days and it temporarily slashed the salaries of top executives, including the firm's co-chief executives.

Let's compare average daily trades of online brokerage between the fourth and third quarters of 2000:

  • A.B. Watley: -10.4%.
  • Ameritrade: +4.9%.
  • CSFB Direct: -3.9%.
  • Datek: +8.7%.
  • E*Trade: +0.3%.
  • Fidelity: +2.6%.
  • Fleet Online: -1.8%.
  • Schwab: -14.3%.
  • Scottrade: +2.7%.
  • TD Waterhouse: +1.2%.

Source : Salomon Smith Barney

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