Many active traders are planning changes in the next three months. Anticipated changes include opening an additional trading account with their current broker, investigating other brokerage firms, and establishing a new brokerage relationship.
“Some active traders are looking for something they’re not getting at their current firm,” said Marc Grozalsky, a director at Rhinebeck, New York-based researcher Phoenix Marketing International.
The quarterly Phoenix Active Trader study has been conducted since 2005. In the latest version, over 1,200 investors who place at least 4 online trades per month participated. For each of the three actions mentioned above, over 20% of these traders responded positively. When investigating other brokers, they might be looking for firms with active trading capabilities such as online trading or for trading software that can be installed on their personal computer or laptop. In addition, nearly 15% of these active traders plan to look for a financial advisor while over 10% said they’ll roll over a 401(k) or other employer-sponsored retirement plan to another company’s investment account.
How can advisors tap this interest from active traders? It helps to have a full-service offering.
“Many active traders have multiple accounts,” Grozalsky said. “Besides stocks and bonds, they might want options and forex [foreign currency] accounts.”
Technology can be another attraction.
“Ads showing images of the firm’s trading platform have been effective,” Grozalsky said. “Active traders can be price-conscious, too, so special offers might bring in new clients.”
Even with all of these bases covered, advisors may find it difficult to move traders from other firms.
“With all the paperwork and other hassles,” Grozalsky said, “it can be difficult to get them to switch.” An advisor with a firm offering a simplified onboarding process may have an edge in this area.
John Duggan, vice president of business development and sales at Phoenix, added that advisors should evaluate how well they are doing versus their peers, in attracting new clients and enhancing business with existing clients. “Advisors who are not doing as well in this market may have to make an effort to be more proactive,” he said.