Online brokers under pressure to prove value

Heightened volatility in investment markets is heaping pressure on online brokers to prove their worth to clients, new research reveals.

Data from Investment Trends showed that Australian investors had shied away from the sharemarket in the second half of 2014, as upheaval saw fear levels rebound and dent return expectations.

Investment Trends analyst, Irene Guiamatsia, said research had found that traders wanted brokers to help them with stock picking.

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"Low market return expectations means investors are finding it more challenging to spot good trading opportunities," said Guiamatsia.

"Towards the end of year, heightened volatility tested investor confidence and placed brokers under increased pressure to demonstrate value for money and to help investors identify opportunities."

Guiamatsia added that in the six months to November 2014, smaller players in the online trading market had started to expand their positions.

However, CommSec remained the dominant player with a 42 per cent primary market share (down from 44 per cent in June 2014).

During the second half of 2014, 111,000 Australian online trading accounts fell dormant, however, their inactivity was offset by 36,000 new entrants and 85,000 dormant investors returning to the market.

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