Executives from the leading brokerage firms joined Forrester Research, Inc. (Nasdaq: FORR) for an industry summit on the future of online brokerage ratings. The goal of the summit, held last week in New York, was to discuss the use of ratings systems as both a tool for consumers and a benchmarking method for brokerage firms.
“The competition among online brokerages is intense,” said David E. Weisman, group director of research at Forrester. “As a result, there is an unusually strong interest in understanding how brokerage ratings are compiled and how they can be used to measure a site’s performance against the competition. To address these concerns, Forrester decided to create a forum in which online brokers can learn about the methodologies used in Forrester’s PowerRankings™ and discuss how these rankings could be used as an industry landmark.
“Our goal in convening the summit was to ensure that the methodology used in Forrester’s PowerRankings was understood by brokers and open to input from industry leaders,” Weisman continued. “With broad industry support and input, we are confident that PowerRankings will quickly become recognized as a trusted measure of online brokerage performance.”
The companies represented at the summit included: Ameritrade; Charles Schwab & Co., Inc.; DLJdirect; E*TRADE; Fidelity Investments; Morgan Stanley Dean Witter; SURETRADE; and TD Waterhouse.
Forrester’s PowerRankings use consumer survey data and rigorous site performance tests to evaluate the leading online brokerages. To find out where consumers are trading and what their experiences have been, Forrester asks members of Greenfield Online’s market research panel to evaluate the sites where they have most recently placed online trades. These experiences are then tested by a team of Forrester experts who anonymously place trades on the sites identified in the survey, objectively scoring them along six dimensions that mirror the criteria in the consumer survey. The consumer survey data and Forrester trader scores are then combined and weighted to produce a score that emphasizes the features consumers deem most important.