Nearly 20% of users of online brokerages are considering changing brokers in the next six months, according to a study by research and advisory firm Aite Group. The group conducted a study of US retail consumers who possess investing accounts with access to online trading.
The study found that price was a leading reason for customers wanting to change brokers. Some 42% of the surveyed customers who are considering a change said the main driver was cost.
However, the survey also found that those wanting to change because of cost were not necessarily the customers of the more expensive full- service firms. “The firms with the highest number of people indicating a potential change due to cost are the firms with the lowest costs,” notes the survey. “Ameritrade, E*Trade, and Fidelity received the highest number of responses in that area; Charles Schwab and Scottrade followed behind.”
It adds, “Consumers who are recruited on price seem to be the same people who drive competitive costs in discount brokerage due to their willingness to consider a change when they can find a lower cost somewhere else. Discount brokerage firms also fared lower in service and garnered 62% of responses for those considering a change because of service issues.”
The second most popular reason to consider change was the ability to aggregate assets under one financial umbrella, with 24% of respondents choosing this. The third most popular was service.