Answering to a Zero-Commission World with Voice
In recent weeks, Charles Schwab and TD Ameritrade have both announced that they will be doing away with trade commissions. Although this is not a new trend since nearly every major self-directed online brokerage is now offering zero-commission trading, the ramifications of this decision will likely impact smaller brokerages. Schwab and TD Ameritrade’s platforms are considered premium products, offering an intuitive interface, high-quality support, and access to real-time market data. As a result, investors will likely begin to jump ship to premium platforms that are now free of cost.
This new trend puts pressure on premium brokerages to recoup lost revenue through other methods, such as payment from order flows, earning interest and conducting loans from investor deposits. However, this is contingent on investors increasing their deposits and trading frequency. Naturally, eliminating commission fees will decrease barriers to investing and help accomplish some of this. But how will brokerages go further to reduce friction in the client experience to encourage higher levels of investor activity?
I believe that voice-enabled investing may just be part of the answer. Offering a more natural method of client interaction reduces layers of friction, which can potentially increase the utilization of a service. TD Ameritrade, Fidelity, and Charles Schwab are in the early-stages of exploring voice technology to service their clients. My report, An Introduction to Voice-First Investing, looks at how clients are responding to this new channel.