Retail Brokerage Firms Step Up Education

by on Apr 11, 2013

This article originally appeared in TraderPlanet. Silviya Simeonova, a research associate on Corporate Insight’s Consulting Services team, also contributed to this article.

The U.S. equity market is off to a strong start in 2013, with the DJIA and S&P 500 hitting new all-time highs in March. Yet retail trading volume among the major online brokerages remains depressed. It’s clear that many individual investors are still gun shy after the financial crisis. This, in turn, is taking a toll on the brokerage industry’s profits.

To help clients get back into the market, several leading brokerage firms like Charles Schwab, TD Ameritrade and tradeMONSTER have been emphasizing their educational resources and strong customer service. Below, we take a look at what these firms are doing to help customers overcome their fears and profit in any market.

Charles Schwab excels in terms of onboarding new clients, particularly active traders. New Schwab customers and existing clients alike can sign up for of a free demonstration of the firm’s website and active trader platforms. Traders are not fed a canned presentation. Rather, these sessions, which are led by knowledgeable representatives, let clients steer the demo to whatever tool or feature interests them. With this hands-on approach, Schwab helps clients boost their own confidence and get better acquainted with the firm’s sophisticated trading tools.

TD Ameritrade also excels in active trader support, providing reliable live chat service through its top-notch thinkorswim platform. thinkorswim is not the only active trader platform to offer integrated live chat, but its live chat representatives are some of the most responsive and knowledgeable we have encountered. thinkorswim professionals are available to chat between 6:00 am and 6:00 pm EST, or well beyond market hours. Uniquely, thinkorswim’s live chat feature offers public chat rooms where clients can connect with other TOS users and exchange trading or technical intelligence. This communal aspect helps traders learn from each other and share actionable ideas in a supportive environment.

One firm that offers an interesting take on online communities is tradeMONSTER, which provides a forum within the client website that lets users submit suggestions for new features and bug fixes. All clients are given a basket of 15 votes and invited to vote for their favorite ideas. Labels such as “under review,” “planned,” “started,” “declined” or “completed” help identify each idea’s status in the development cycle. A moderator participates in the forum, replying to suggestions and comments posted by users, as well as posting updates on the status of enhancements. To date, 300+ ideas/bug fixes have been implemented by tradeMONSTER through this collaboration with its clients. The interactive nature of this forum makes it much more constructive than the more traditional feedback surveys some firms provide. It gives clients a stake in creating their own experience.

TD Ameritrade has become a leading provider of investor and trader education through its 2009 acquisition of thinkorswim and its Investools division. Investools gives all TD clients access to some free content as well as paid comprehensive programs covering various trading and investing topics ranging from basic to expert levels. With titles like advanced technical analysis and automated investing, Investools opens the door to one-on-one coaching, workshops, a trading community, self-paced coursework and various tools. And while the firm’s courses can run into the thousands of dollars, the training is more in-depth and hands-on than what competitors provide.

Charles Schwab and optionsXpress excel at providing well-organized educational resources integrated directly into their websites and delivered via a variety of media – video, webinars, articles, live events, etc. Both firms have comprehensive learning centers, where content is organized by a number of different criteria, like level of investing proficiency, investing topic (e.g., options, mutual funds), investor resources vs. active trader resources, or platforms and tools tutorials vs. investment education. optionsXpress also offers a rich selection of on-demand videos that can be filtered by such criteria as “About optionsXpress,” “How-to Platform Guides” and “Options Trading.” optionsXpress’s use of video for educational purposes reflects a broader brokerage industry trend toward educating investors through video rather than articles.

optionsXpress Educational Center

Charles Schwab and optionsXpress also stand out by proactively bringing educational opportunities to their clients’ attention. Schwab periodically sends “Investing Insights” emails, which feature excerpts from articles written by investing experts and allow clients to link to the full articles. Similarly, optionsXpress sends weekly emails listing scheduled webinars for the upcoming week. The firm hosts multiple webinars on a daily basis, covering such topics as technical analysis, options and new tool demos.

The crash of 2009 clearly shook investor confidence. Millions have yet to fully return to the market. While retail traders are by definition do-it-yourselfers, more than ever they value some support, particularly if they are returning after a long absence or just getting started. It’s no surprise then that leading self-directed brokerage firms have sought to differentiate themselves through their high level of support and strong educational offerings. It makes good business sense in this market climate.