Forrester Research of Cambridge, Mass. expects the four million on-line brokerage accounts that exist today to surge to more than 20 million by 2003. Forrester made this prediction after studying the online financial habits of 10,000 consumers. Forrester's study was conducted in March.
Mutual fund companies and other financial services firms must prepare for this growing appetite to purchase and manage investments on-line, Forrester said.
Because the Internet makes it easy for investors to compare performance and fees, Forrester expects Internet fund supermarkets to emerge as the primary purchase points for mutual fund customers. This will force the demise of under-performing funds, Forrester said.
"Full-service firms, which have yet to move on-line, need to enter the fray now or risk losing market share to the emerging leaders - the mid-tier brokers," said James Punishill, an on-line financial services analyst at Forrester.