By Joseph A. Giannone
NEW YORK, Dec 1 (Reuters) - Online U.S. discount brokerages, which gained ground on the big full-service Wall Street firms since the 2008 crisis, are expected to attract more of their customers and assets in the years ahead.
The largest U.S. brokerages, many owned by banks slammed by the financial crisis, suffered a wave of departures by brokers and also lost thousands of customers. Benefiting from this shakeout were online brokers, which increased their share of the $12.4 trillion in total U.S. client assets by 0.8 percentage points to 12 percent, consulting firm Aite Group said.
Looking ahead to 2013, Aite see Fidelity Investments expanding to 13.5 million accounts from 12.4 mln accounts in October. Charles Schwab Corp is likewise seen adding 1 million accounts to 8.9 million accounts, while TD Ameritrade may jump to 9.2 million accounts from 7.9 million.
The No. 4 online broker, ETrade Financial, is expected to have 3.9 million, up from 3.7 million accounts. Aite based its projections on recent reported growth rates.
The online brokers 'all saw a substantial increase in their numbers of clients during crisis years. These growth rates, in a recession environment, indicate the online firms are taking share,' Aite wrote.
Independent investment advisers gained 1.5 percentage points to 12 percent. The biggest brokerages lost some ground --- nearly one percentage point -- but remained dominant with 38 percent of the market, Aite said.
'Now that investors have experienced significant portfolio losses, they have become more cautious with their investment dollars,' Aite said. 'They seek more control over their investments, such that they can make their own adjustments.'
The technology and tools available to online brokerage customers has improved greatly over the years, attracting even wealthier and more sophisticated clients.
Hedging its bets is BofA's Merrill Lynch, which is offering both traditional and online services.
The nation's No. 2 brokerage with more than 15,000 advisers this year relaunched Merrill Edge, an online service designed to attract people with less than $250,000 to invest.
Aite noted that Bank of America Corp expects Merrill Edge to expand 20 to 30 percent a year. At the low end of that range, Merrill Edge would reach 2.4 million accounts and $100 billion of client assets in about three years.
Growth could be fueled by referrals from Bank of America's consumer bank branches as well as Merrill Lynch advisers. Aite observed there are limits on pay for bank staff, while brokers tend to resist giving up even low-balance accounts to a business that could be seen as a competitor.
To address those issues, Merrill offers their brokers incentives to refer low-asset accounts and they eliminated payouts for accounts below the minimum.
(Reporting by Joseph A. Giannone; Editing by Phil Berlowitz) Keywords: ONLINEBROKERS/ (joseph.giannone@thomsonreuters.com; Tel: +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net; www.twitter.com/reutersjoe) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Dec 1 (Reuters) - Online U.S. discount brokerages, which gained ground on the big full-service Wall Street firms since the 2008 crisis, are expected to attract more of their customers and assets in the years ahead.
The largest U.S. brokerages, many owned by banks slammed by the financial crisis, suffered a wave of departures by brokers and also lost thousands of customers. Benefiting from this shakeout were online brokers, which increased their share of the $12.4 trillion in total U.S. client assets by 0.8 percentage points to 12 percent, consulting firm Aite Group said.
Looking ahead to 2013, Aite see Fidelity Investments expanding to 13.5 million accounts from 12.4 mln accounts in October. Charles Schwab Corp is likewise seen adding 1 million accounts to 8.9 million accounts, while TD Ameritrade may jump to 9.2 million accounts from 7.9 million.
The No. 4 online broker, ETrade Financial, is expected to have 3.9 million, up from 3.7 million accounts. Aite based its projections on recent reported growth rates.
The online brokers 'all saw a substantial increase in their numbers of clients during crisis years. These growth rates, in a recession environment, indicate the online firms are taking share,' Aite wrote.
Independent investment advisers gained 1.5 percentage points to 12 percent. The biggest brokerages lost some ground --- nearly one percentage point -- but remained dominant with 38 percent of the market, Aite said.
'Now that investors have experienced significant portfolio losses, they have become more cautious with their investment dollars,' Aite said. 'They seek more control over their investments, such that they can make their own adjustments.'
The technology and tools available to online brokerage customers has improved greatly over the years, attracting even wealthier and more sophisticated clients.
Hedging its bets is BofA's Merrill Lynch, which is offering both traditional and online services.
The nation's No. 2 brokerage with more than 15,000 advisers this year relaunched Merrill Edge, an online service designed to attract people with less than $250,000 to invest.
Aite noted that Bank of America Corp expects Merrill Edge to expand 20 to 30 percent a year. At the low end of that range, Merrill Edge would reach 2.4 million accounts and $100 billion of client assets in about three years.
Growth could be fueled by referrals from Bank of America's consumer bank branches as well as Merrill Lynch advisers. Aite observed there are limits on pay for bank staff, while brokers tend to resist giving up even low-balance accounts to a business that could be seen as a competitor.
To address those issues, Merrill offers their brokers incentives to refer low-asset accounts and they eliminated payouts for accounts below the minimum.
(Reporting by Joseph A. Giannone; Editing by Phil Berlowitz) Keywords: ONLINEBROKERS/ (joseph.giannone@thomsonreuters.com; Tel: +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net; www.twitter.com/reutersjoe) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.