Exclusive Interview With President Of SogoTrade

Recently, Benzinga.com had the opportunity to interview David Whitmore, who is the President of online broker SogoTrade. Previously, Whitmore held positions at TD Ameritrade (NASDAQ: AMTD) and Datek. SogoTrade is a subsidiary of Genesis Securities. He told Benzinga that SogoTrade’s percentage growth rate is in the “multiples,” and that they are seeing between 300%-500% annual growth in different areas such as daily trades and customer assets. He attributed this to a strong advertising push by the company over the last 18 months. One of the ways that SogoTrade has been able to differentiate itself is through its value proposition, which is one of the most compelling in the industry at $3.00 a trade.

Mr. Whitmore talked a little about the consolidation that has taken place in the online brokerage space and said that this was an important phase in the industry. He said, however, that this trend has slowed considerably and that SogoTrade probably has some time before larger firms like E-Trade (NASDAQ:EFTC) and TD Ameritrade (AMTD) take notice of their low-cost counterpart. According to Mr. Whitmore, consolidation has slowed because bigger companies have acquired many of the middle sized firms. As a result, there is currently a divide in the industry between big brokers such as E-Trade and Ameritrade and smaller companies such as SogoTrade, Trade King, and Zecco.

One of the advantages that Whitmore said SogoTrade has over the more established online brokerages is that his advertising cost per account is meaningfully less. This has allowed him to allocate his marketing budget in a very efficient manner. SogoTrade is at a point in its evolution where rapid growth is possible utilizing low-cost, efficient marketing channels. One of the ways that this benefits his customers is that it substantially reduces their cost per trade. In terms of comparison, TD Ameritrade spends about $300 for advertising per customer account that they open. Whitmore said that his cost is much less than that. He also said that he will be able to continue to grow SogoTrade at current marketing expense levels for a reasonable period of time. Right now about half of SogoTrade’s marketing budget is allocated to paid search advertisements through Google (NASDAQ: GOOG) and other search providers. The other half is spent on online display on various investment and financial websites.

In 2010, Whitmore said that he does not think there will be a lot of new services rolled out by online brokers, nor will considerable consolidation take place. Rather, he thinks that the status quo will be restored in the industry after the turmoil in the markets in 2008 and 2009. Under such a scenario, SogoTrade will continue to focus on the value it can add for its customers through both their low cost trading commissions and their high-speed order execution infrastructure. According to Whitmore, “SogoTrade’s customers really do benefit from the order routing infrastructure of Genesis Securities. Genesis serves black box traders, algorithmic traders, and small hedge funds who enter thousands of orders a minute.” These same systems handle SogoTrade’s order flow as well, so the technology is first rate. For traders that are looking for a low-cost, fast and reliable online broker, SogoTrade has a lot to offer. For more information on this fast growing broker with the lowest commissions in the industry, please visit SogoTrade.com.