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E Trade Tops Online Broker Survey

E Trade held on to its number one slot ahead of DLJ Direct to lead the quarterly Internet Broker Scorecard of 55 contenders by Gomez Advisors.

"It's a two-horse race at the top," Gomez Associates founder Julio Gomez told CBS "They're significantly ahead of the pack."

E Trade took the number one spot over DLJ Direct last quarter after DLJ had it for the previous four quarters. The two firms led in overall scores based on five categories: ease of use, customer confidence, on-site resources, relationship services, and overall cost.

"E Trade excels at customer education, tutorials and help as well as sophistication," Gomez said. "They're great at issuing news and pricing alerts which are important to people."

Filling out the top five were No. 3 Datek, which moved up from No. 5, Discover, and Waterhouse.

"Datek's been methodically and steadily adding features and improving the design of their site," Gomez said. "It's really starting to show."

The list, provided exclusively to, will be released late Thursday morning at

Gomez evaluated 55 companies in its latest scorecard, but the category itself has grown to 100 companies, up from 98 just a few weeks ago.

About 6.1 million American trade stocks online, up from 1.5 million in the past two years. About a quarter of the 100,000 retail trades per day take place on the Internet, according to Piper Jaffrey.

Suretrade won the contest for the best overall cost, calculated by commissions for 20 trades and margin interest on $5,000.

"Suretrade's $7.95 commission and low margin rates helped them leap from Farsight, which dropped its $7 promotional rate during the quarter," Gomez said in the report.

Datek won the number one slot for best broker for the "Hyper-Active customer trader" category. "A simple interface and and fast execution are crucial to this market junkie," the study said."Their trading is so frequent, they don't even want to re-enter their password on every order."

More brokers this quarter are offering real-time updates of account balances, available on 13 of the 55 firms polled. Accounts are updated right after trades, not overnight.

More help is available now. Sixty-nine percent of the firms polled offer a glossary of investment terms and site help.

Online brokers are also moving into banking services. More than half of the brokers offer free, unlimited checking with an account, 13 percent offer online bill payment capability.

It's the seventh Scorecard produced by Gomez, which says it's the only company that provides rankings in the online brokerage game.

Gomez's rankings are often featured in ad campaigns by online brokers, not unlike the J.D. Power survey's role in car advertising.

Gomez ranks the brokerages each quarter on ease of use, customer confidence, on-site resources, relationships services and overall cots based on its evaluations and a checklist of 140 criteria. The brokerage with the most points wins.

Data is gathered through surveys sent to brokerages with answers, verified by checking respective Web sites. It also tracks download times from Web sites, and general ease of use.

Gomez also calls customer service reps with questions to see how brokerages handle consumers.

Written By Steve Gelsi

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