ONLINE BROKERAGES have a tenuous hold on their current customers, according to a recent report from Aite Group. The study, which examined retail consumers of online brokerage services and their preferences, reveals that more than 20 percent of online brokerage users are considering changing brokers within the next six months.
Price, cited by 42 percent of the 332 U.S. retail online brokerage participants surveyed by Aite, is the primary reason customers are considering a change. However, Aite reports, the firms with the lowest trading costs, including Ameritrade and E-Trade, exhibited the highest number of people indicating a potential change due to price, suggesting that discount brokerages -- which often recruit customers based on lower costs -- will have a hard time holding on to clients.
Online brokerage tools also play a significant factor in retaining existing clients, the report notes. While 37 percent of survey respondents say online capabilities had "no impact" on their initial selection of a broker, just 20 percent of respondents say that online capabilities have "no impact" on their decision to change brokers. This indicates a learning curve among users -- online functionality may not be a key factor in customer onboarding, but it plays an increasingly important role in customer retention, according to Aite.