'Unhelpful' online stockbrokers face failure in changing market

NEWS The report predicts that by 2005 mainstream traders will account for 80 per cent of online investors. These newcomers will need more support and advice than many of today's 'execution-only' sites offer. The new style internet stock broker will need to simplify investment procedures for this risk averse breed of investor by offering financial education, help with investment decisions, and simple analytical tools to measure stock performance, according to Charlotte Hamilton, Forrester analyst and author of the report. She explained that sites that fail to offer these services will go bankrupt or give in to consolidation. The report's conclusions got the backing of many of today's online stockbrokers, with most already investing in the analytical and educational tools recommended in the report. Simon Wajcenberg, MD of TheMutual.net said a closely affiliated investment community would become a strong selling point for any site, as competition heated up. "Financial sites are already becoming much of a muchness. They all offer the same charting service, stock quotes, analyses. The only differentiating points will be the strength of the editorial and the ability to attract an investment community that is affiliated with the site. It will attract first time investors who are uncertain but see other investment groups working with the site," he said. Paul Steinberg, business development manager with UK invest, agreed that a differentiation factor will help attract customers who knew little about the investment industry. "There is little motivation for new investors to differentiate between online brokers. That's a major hurdle for these sites to overcome. It's going to be a slow process. We're investing in strong relevant editorial content and dumbing down analytical tools to a simpler level for the man on the street," Carolyn Abbott, a registered stockbroker, and communications director with Stocktrade.co.uk, said that the privatisation drive of the eighties and dot-com stock option schemes meant that more people than ever in the UK now hold shares. But she said progress over the next five years will be gradual as many of these shares were still paper based, in the form of share certificates, and first time investors were likely to prefer the advice of a traditional broker.