Research Demonstrates Active Investor Market is an Emerging Growth Opportunity for Online Brokerage Firms

Scivantage and Celent, a research and consulting firm focused on the application of information technology in the global financial services industry, have released a report on the emerging opportunity within the active investor segment.The active investor, a self-directed investor that trades between 3 to 10 times per month and relies on technology to support their investment experience, represents a significant growth opportunity for online brokerage firms, according to the latest Celent Research Note titled, “The Self-Directed Investment Market: A Focus on Active Investors”. With continued market uncertainty, an increasing number of retail investors are moving away from managed brokerage relationships and opting for the self-directed model in order to take a more hands-on and active role in the management of their investment future. Celent estimates that by 2012, the active investor market will reach 16 million investors, making up 40% of the self-directed market.

Some of other findings in the report include:

  • Active investors represent a significant opportunity for firms, with a projected growth rate of 9% by end of 2010.
  • Access to sophisticated investment products as well as market volatility will encourage the active investor segment to grow at a faster rate than the traditional investor segment.
  • Higher trading volume and use of complex trading strategies make the active investor a very profitable segment for online brokerages.
  • Online brokerages will need to enhance their platforms to remain competitive; the most important areas will include more sophisticated trading tools, enhanced educational materials, more social networking features, improved mobile access and improved usability.
  • Once a product for the sophisticated trader, options are becoming increasingly popular among all investors.

“For the active investor segment, the investment experience has become less about the speed and cost of the transaction and more about the quality of service, access to robust functionality and the overall convenience to proactively manage their investments, at anytime and from any place,” said Isabella Fonseca, a senior analyst within Celent’s international group and author of the report. “Those firms that are willing to invest and adapt to client demands will be future industry winners.”

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