Online Investing Accounts Predicted to Reach 3 Million This Year

BondMarkets, November 1997

Online investing accounts will grow to 3 million by year's end, accelerating to 14.4 million in 2002, when assets managed online will reach $688 billion, according to analyst Michael E. Gazala of Forrester Research. In its latest technology report, Net Investing Blasts Off, the firm examined how a broad range of financial firms are positioning their services to a growing number of interactive traders.

Another trend will be the emergence of a new type of electronic broker. "Mid-tier" brokers will step in to fill the market gap between full-service and discount brokers. And finally, with online investing at full throttle, companies will face a more competitive landscape. To differentiate their services, investment banks will serve as one of three types of providers:

• Automated aides for active self-service customers who value pricing and seek transaction volume.
• Product valets for investors who are life-event driven, need a bit more advice and product variety, and focus on one-stop shopping.
• On line advisers for customers who value guidance and have a lot of assets under management and want the inside track to Wall Street.

Gazala's presentation, which was made to the Technology Clearinghouse Subcommittee on October 28, will be repeated at the Association's Technology Conference on November 21 at the Sheraton New York.

For more information, call Julie Stevens at 212.440.9429.