A majority of customers expect to change brokers within the next 6 months. In fact 2007 may be know as the “Year of the Switch“.

That’s the premise of an eye-opening article published over the weekend from the Aite Group LLC, “What Really Matters to Retail Consumers of Online Brokerage? Who They Are and What They Value“. Note: If you are not a subscriber, you can read the informative article summary.

Many forces in the industry contribute to this era of switching we’re about to enter:

1. Broker consolidations of 2004-2006 are over and now that the mergers of systems and accounts is complete, firms are now facing their customers for the first time – for better or worse
2. New entrants now seek to serve unserved markets – one large and significant, another new and untested. Bank of America in one move is suddenly a powerful competitor with more branch offices than you can shake a stick at. The jury is still out regarding Zecco.com with its promise of limited, but free trades.
3. The Tabb Group reports buy-side traders and hedge funds continue to value broker relationships, specifically these services: idea generation and research (26%) then execution quality (23%) – many brokers are still figuring out what they have in the stable or know that their offerings need a boost.

The Aite Group paper also outlines what it’s going to take to keep online brokerage customers from making the move: a combination of price and the online tools offered.

I’ll add one more item to this short list: customer education – I don’t what form it takes, but the more engaging and imaginative the better. Make videos with trained monkeys or spook Borat; present context-sensitive help with plenty of examples at the click of a mouse; organize seminars, happy hours, whatever – just do it.

These top the list of why customers are attracted elsewhere and what will keep them with their existing broker. We’re partial but we like the steps that Scottrade takes with regard to retaining as many customers as possible while attracting new ones. Their upcoming Users Summit in Chicago this weekend is a perfect example.