Report: Online Investing To Change Face of Finance

Traditional investing will continue to decline as online
brokers gain popularity, according to a study released Thursday by NFO Interactive.

While online investing is enjoying tremendous growth of late, much of its success has come at the expense of traditional investment firms, said Lee Smith, NFO’s vice president of marketing and business development.

The number of online investors in the United States increased by 2.2
million to more than 5.2 million during 1998. Forty-eight percent of those said they were using full-service brokers less and 38 percent of online users reported they were using discount brokers less as well.

“With nearly 55 percent of all online investors believing their dependence on a full service or discount investing company will decrease, additional structural changes within the investing industry are imminent,” Smith said. “Many more companies will be forced to consider online investing as an integral component of their business strategy.”

Even as it grows, the validity of online investing has come into question.
Recent problems have plagued several online brokers including AmeriTrade, E*Trade and Charles Schwab. Investors’ frustrations with E*Trade have prompted two lawsuits and an investigation by the New York Attorney General.

NFO’s study was conducted last December. The research firm surveyed 1,547 online households which contained 767 online investors.

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