People in Survey Warm To On-Line Investment, Will Forgo 'Live' Counsel

More investors are planning to use on-line brokerages, according to an Internet research company.

Sixteen percent of those who have not begun trading on-line expect to do so by July 2000, Cyber Dialogue says. Its prediction is based on a survey it did last year with Booz-Allen & Hamilton, the management consulting firm.

Fifty-two percent of the traditional investors surveyed-that is, those who did not trade on-line-said the market research available on-line was as good as traditional brokers' research. And only 23% of the traditional investors said they require interaction with a broker.

As on-line brokerages get better at offering personalized advice over the Internet, their penetration rates will rise, predicted Grande Bucca, a vice president and partner at New York-based Booz-Allen.

Until now, Mr. Bucca said, on-line firms have penetrated two market segments: traditional discount traders and self-directed traders who became attracted to Internet trading.

He said brokerages such as Charles Schwab & Co. "will crack the simple advice problem." That could push 60% of investors and 40% of assets on-line in the next three or four years, he said.

The study also found that on-line brokerages trailed Internet portals in attracting users to personal financial management tools.

America Online Inc., Intuit Inc., and Yahoo Inc. ran the favorite sites. Of the respondents who used on-line financial management sites, 32.5% said they used AOL's personal finance site most often, 13.5% Intuit's Quicken.Com, and 10.8% Yahoo's finance site.

Charles Schwab's Web service ranked fourth, at 6.1%. Its rival, Fidelity Investments, had 3.1%.

On-line brokerages do face challenges, Mr. Bucca said. The expected growth of on-line investing could further strain trading systems. Mr. Bucca noted that major on-line brokerages suffered well-publicized service outages this year.

Uncertainty also remains about whether on-line brokerages can deliver high-quality, customized research economically.

Finally, investor willingness to do without the advice of professional brokers could change if the current bull market were to give way to a sustained bear market, Mr. Bucca said.

The growth rate of on-line trading set another record in the first quarter as daily trades surged 49%, according to U.S. Bancorp Piper Jaffray. The increase was well above the 32% jump in the fourth quarter.

On-line brokers added 1.2 million accounts during the quarter, a 17% increase, and the assets in Internet trading accounts grew by 24%, to more than $523 billion.

"On-line brokerages continue to make incredible gains," said Stephen C. Franco, senior research analyst for electronic commerce at the investment banking subsidiary of U.S. Bancorp, Minneapolis.

Charles Schwab maintained its lead, with a 27.9% share of the market. E- Trade Group, with a 13.3% share, stayed at No. 2, ahead of Waterhouse Securities, at 11.7%.

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