Since the first financial web sites crawled out of the primodial Internet soup in 1993-1994,
the number of online brokers has soared to well above a hundred.
How do you pick the right one for you? There are several excellent online resources
rating the brokers based on price, functionality, reliability, support offered, and such pithy details.
We have listed the major ones for you in the section on other ratings.
As you can see from any of these ratings, it's a pretty competitive business among
the major players. Each strives to outdo the other, and the leadership changes from quarter
to quarter.
In fact, one of the interesting artifacts of these changing ratings is that
multiple online broker claim to be the number one rated online broker at the same time.
Everyone loves a party, and we at Netsurfer Focus decided to pile in with our own
unique point of view. Our approach to the problem of evaluating online brokers is
to use their television advertising.
Now it may seem that we have finally gone over the edge,
but there is method in the madness, and courtesy of our biz school wonk no less.
Here's the scoop. Online brokerage is big business, and right now the business of the Internet is
all about building brand and accumulating eyeballs. Although online brokerage accounts
have rocketed in the last 12 months, the denizens of the empire of the future are still out
there among the digitally deprived. To bring them into the fold,
online brokers are mounting advertising campaigns with war chests
in the hundreds of millions of dollars.
And the old media channel of choice is television:
besides the advantage of sound and animation, television ads are all the more
powerful because, unlike print, they can't be ignored with the flip of a page.
Our take is that how the broker wants you to think about them tells you something
about them. It says something about what they think their target customers are all about.
It gives you clues as to whether you are a good fit with a particular firm, and whether
you would want to do business with them. A Rohrschach blot test of a sort if you will.
And hey, we think it's a fun and interesting way to think about the problem.
Advertising is made up of information and emotional appeal in varying proportions.
Our approach is to apply the Netsurfer dictum of
"Delivering Useful and Entertaining Information",
augmented with an assessment of emotional component, to rating the online brokers' ads.
Since the stock market runs on two emotions, fear and greed, we have
created and applied the
Netsurfer Focus Fear-Greed Scale in the process.
We reviewed the ads of the major online players and ranked them based on their
message and how well that message came across based on the above.
Other ranking criteria include message clarity and production quality.
Memorability is factored in since our methodology is base on our recall of
the ads, and opinions most certainly abound.
The results are summarized in the associated
table.
For all the gory details, see the Fine Print
and Cast of Thousands sections.
As is abundantly clear in the results,
we bias our message rankings against excessive emotional manipulation.
Our justification for this lack of objectivity? Maybe it's just a misguided sense of fair
play. Online investing - and investing in general - is still very new to many.
Yet the target audience is precisely these newbies and not grizzled veterans.
Buying this piece of the American dream has a bigger downside
than failing to attract the opposite sex with bouncier hair or brighter teeth.
And then again, maybe it's not misguided. Some of these excesses
are now raising concerns
if not action from the NASD regulators and other parts of the investment community.
NEXT
