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                                                     Computerized Investing.


  AAII’s Discount Broker Survey provides a way for our
members to voice their opinions on the brokers they use                                                Table 2.
and to see how the brokers rate against one another among                             Primary Reason Members Selected Their Broker
our membership. The Discount Broker Survey is one of
AAII’s popular on-line questionnaires found in the Member                                             2005   2004   2003    2002   2001
Surveys area of AAII.com (www.aaii.com/membersurveys).                                Commissions     53%    53%    45%     42%    46%
The Discount Broker Survey asks members which discount                                Services        25%    23%    26%     27%    26%
                                                                                      Convenience     15%    16%    24%     22%    19%
broker they use and the primary reasons for choosing a
broker and allows members to rate their satisfaction with
brokers on a number of specific criteria.                                       rowly beat Fidelity for the number two spot this year.
  Table 1 shows a summary of the past five years of results                        The top brokers continue to encompass a greater number
for this survey; it presents the ratings of the most popular                   of our members each year. In 2001, the top five brokers
brokers as determined by member responses collected                            accounted for slightly less than half of the total responses.
since 2001. Results are ranked based on the percentage of                      The figure has grown every year for the past five years,
members using each broker. Charles Schwab reigned as                           although this year’s increase of 1.9 percentage points, to
the most-used broker among members responding to the                           a total of 69.1%, is the smallest to date. This may be an
survey from 1999 to 2002. Scottrade, which debuted on the                      indication of the consolidation trend that swept through
survey in 2002 at number five, jumped to the top spot in                        the industry over the last few years.
2003 and has remained number one for three years. Since                           Table 1 also provides ratings for each broker in four areas:
2002, Scottrade’s popularity among members has grown                           overall satisfaction, service reliability, trade price and execu-
each year, increasing 314% over the past four years. While                     tion speed. Service reliability refers to the ease at which you
Charles Schwab’s popularity fell in 2003 and 2004, it nar-                     are able to access your broker via the Web. Trade price takes
                                                                                           into account the price at which on-line orders are
                                                                                           filled relative to your expectations. Execution
                                     Table 1.                                              speed refers to how quickly an on-line order is
                         Ratings of Most Popular Brokers                                   filled. TD Waterhouse and Ameritrade—which
                              % Usage             Ratings (Top Score = 4)
                                                                                           rank fourth and fifth, respectively, in usage among
                              of Survey  Overall     Service     Trade      Execution      our members—rank at or near the bottom of each
    Rank    Broker           Responses Satisfaction Reliability  Price       Speed         ratings category this year. Meanwhile, Scottrade
     2005
                                                                                           and Fidelity rate at the top of each category.
        1   Scottrade             21.5%      3.5        3.5       3.3          3.5
        2   Charles Schwab        14.5%      3.4        3.4       3.1          3.3           Table 2 reports changes in the importance of
        3   Fidelity              14.0%      3.5        3.6       3.2          3.6         factors members take into account when selecting
        4   TD Waterhouse         10.5%      3.3        3.3       2.9          3.3
        5   Ameritrade             8.6%      3.2        3.2       2.9          3.4
                                                                                           their broker. In 2005, as in every year, commissions
    2004                                                                                   are the key factor. Until last year, the importance
        1   Scottrade             21.1%      3.5        3.5       3.3          3.4         of convenience rose slightly each year, while the
        2   Fidelity              14.1%      3.4        3.6       3.1          3.5
        3   Charles Schwab        13.7%      3.1        3.3       2.6          3.3
                                                                                           importance of services fluctuated. This year the
        4   Ameritrade             9.3%      3.3        3.3       2.8          3.1         importance of commissions remained the same,
        5   TD Waterhouse          9.0%      3.1        3.3       2.8          3.1         while services rose two percentage points and con-
    2003
        1   Scottrade             14.6%      3.6        3.4       3.3          3.4
                                                                                           venience fell one percentage point. This is probably
        1   Charles Schwab        14.6%      3.2        3.2       2.9          3.2         a result of pricing systems that fail to substantially
        3   TD Waterhouse         12.2%      3.0        2.9       2.6          3.0         differentiate firms and investors moving toward
        4   Fidelity              11.2%      3.7        3.6       3.1          3.4
        5   Ameritrade             9.5%      3.2        3.2       3.0          3.3
                                                                                           a one-stop-shopping attitude of obtaining more
    2002                                                                                   control over trades and increased research and
        1   Charles Schwab        21.2%      3.3        3.5       3.0          3.5         advice in addition to good trade execution.
        2   TD Waterhouse         15.4%      2.8        2.8       2.7          3.1
        3   Fidelity              10.2%      3.5        3.5       2.9          3.4
                                                                                             Overall, the results of the survey reflect the
        4   Ameritrade             7.6%      2.9        2.9       2.8          3.1         changes that have taken place in the industry
        5   Scottrade              5.2%      3.4        3.4       3.3          3.4         over the years and illustrate how investors have
    2001
        1   Charles Schwab        14.0%      3.2        3.2       2.9          3.3
                                                                                           changed in what they feel is important when
        2   TD Waterhouse         12.3%      2.7        2.6       2.8          3.0         selecting a discount broker.
        3   Fidelity               7.5%      3.2        3.1       2.6          3.0           Please participate in the broker survey for 2006 by
        4   Datek                  6.9%      2.9        3.0       2.7          3.1
        5   E*Trade                6.5%      2.2        2.4       2.3          2.5
                                                                                           going to the Investor Surveys area of AAII.com.


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