Ameritrade Tops Online Brokers in Report

Ameritrade earned the top spot among online brokers in a just-released report by JupiterResearch.

The firm returned the strongest overall results, garnering the best measures for both customer intensity (customer minutes per month) and hyper-usage (the percentage of highly engaged site visitors). JupiterResearch said Ameritrade’s high hyper-usage score suggests its customer base has a greater percentage of active customers than the other surveyed firms.

Other firms analyzed in the report were Fidelity, Scottrade, Charles Schwab , E-Trade , TD Waterhouse and Harrisdirect. The study was conducted in the fourth quarter of 2004, the most recent period that figures were consistently available.

While Ameritrade gained a significant number of accounts through an aggressive acquisition strategy dating back to 2001, prior to the impending merger with TD Waterhouse, the firm still lags behind Fidelity in unique visitors and behind Fidelity Investments and Schwab in number of accounts, the report concluded.

“The online brokerage sector is going through a rationalization process,” stated Asaf Buchner, associate analyst at JupiterResearch. “The players are seeking scale and diversified sources of revenue, as they continue to confront downward pressure on trading commissions and a limited pool of active online traders.”

With the addition of TD Waterhouse, Ameritrade will have significantly greater online reach (unique visitors) because of little customer duplication across the two institutions, but will still be outpaced slightly by Fidelity, the report said. In addition, TD Waterhouse appears to attract more casual traders than Ameritrade.

While the combined firm will have significantly greater assets under management, JupiterResearch expects that a decline in the percentage of customers who are active traders will jeopardize the firm’s top spot on the next ranking. (Jupiter Research is owned by Jupitermedia, which also owns internetnews.com.)

JupiterResearch said it used a proprietary ranking method based on “sophisticated site traffic variables, number of accounts, assets under management and average daily trade figures.” The study is designed to let brokerage firms assess their competitive strengths and areas of exposure online and offline.