The outlook for online investing is healthy, as 90% of online investors plan to continue trading online and one-third intend to increase their trading volume, according to the J.D. Power and Associates 2002 Semiannual Online Trading Investor Satisfaction Study released today.

Online investors are now primarily buying stocks on the dip, acting more cautiously or conservatively and placing greater emphasis on diversifying their portfolios, the survey found. This new caution may have contributed to a doubling in the use of multiple brokerage firms and a tripling of the percent of portfolios placed with secondary firms, exceeding the levels observed a year ago.

Aggregation services have declined both in importance and likelihood of use, it says. “Consolidation, which was the name of the game six months ago, is not working effectively to retain current investors,” said Ellen Guion, senior research manager of investment services at J.D. Power. “Investors are closing multiple accounts within their primary firm, but the majority are moving those assets to new or existing accounts with a different firm.”

The study reports that the online trading industry has seen little new growth, with only a 2% increase in new investors over the past six months. While online investing among the Gen-X segment (ages 25-34) declines, seniors (55+) are increasingly drawn to it. The senior online population has more than doubled in the past year, and seniors now represent one-fourth of all online traders.

Scottrade ranks highest in overall customer satisfaction for the second consecutive time. The firm’s achievement is largely due to high ratings from investors for customer service and trade execution. It is followed closely by Merrill Lynch, Fidelity and Schwab, respectively.

“Firms that have focused on information resources and customer service will continue to be on the right path, as these factors are still the key components of investor retention,” Guion said. Information resources offered by online financial service providers continues to be the key driver of overall satisfaction, followed by customer service, trade execution, Web site capability, core values and cost.

The study is based on responses from a random national sample of 10,344 online investors who primarily invest with one of 15 firms included in the study.