Category: Financial ServicesCanada

Bank Customers in Canada Seeking Financial Advice but Some Retail Banks Not Effectively Delivering, JD Power Finds

2023-06-27

jillian.breska

TORONTO: 29 June 2023 — The economic pressure caused by inflation, capital markets volatility and rising interest rates has put
its mark on bank customers in Canada, with nearly two-thirds (66%) being classified as financially unhealthy,¹ according to the JD Power 2023 Canada Retail Banking Advice Satisfaction Study,^SM released today. The study also finds that, while personalized financial advice can elevate customer satisfaction and engagement with retail banks, only 42% of customers recall receiving advice from their financial institution and only 50% of those customers found the advice to be effective. Furthermore, overall satisfaction with banking advice declines 4 points year over year to 588 (on a 1,000-point scale).

“Canada’s large banks should be more attuned to their customers’ financial state and needs, offering and tailoring advice that is aligned with their financial challenges and tied to their future financial goals,” said Jennifer White, senior director for banking and payments intelligence at JD Power. “During times of financial hardship, customers are looking for guidance. Delivering advice can increase customer trust by 9 percentage points, and when the advice is completely personalized, trust rises 15 percentage points. Unlike their U.S. counterparts that demonstrated an improvement on that front,² Canadian banks have yet to rise to the occasion and are still lagging in delivering the right advice at the right time to make a positive impact on their customers’ satisfaction.”

Following are some key findings of the 2023 study:

• Financial state tied to satisfaction: The study finds a correlation between customers’ financial state and satisfaction with their bank’s advice. Satisfaction among those who are considered financially healthy is significantly higher (657) than among those who are considered financially stressed (562) or vulnerable (500).
• Advice personalization: The top three key performance indicators (KPIs) for retail banking customer satisfaction are focused on advice personalization: the advice completely meets the customer’s needs; the bank representative shows genuine care for the customer’s concerns; and the advice is highly tailored to the individual. When any of these three KPIs are met, satisfaction increases more than 200 points.
• Most common advice topics: Investment and retirement advice is the most frequent type of advice both desired and received by bank customers and interest for this topic is on the rise.

Study Ranking
RBC Royal Bank ranks highest in customer satisfaction with retail banking advice for a third consecutive year, with a score of 610. BMO Bank of Montreal (592) ranks second and CIBC (591) ranks third.

The 2023 Canada Retail Banking Advice Satisfaction Study includes responses of 2,911 retail bank customers in Canada who received any advice/guidance from their primary bank regarding relevant products and services or other financial needs in the past 12 months. The study was fielded in February-March 2023. In addition to bank financial advice ratings, the study also provides financial health support index benchmarking data that evaluates proficiency of banks and credit card issuers in delivering financial support to customers.

The study also captures responses from customers about their satisfaction with the financial health support provided by their financial partners. Top-performing banks in the banking financial health support index are (in alphabetical order): BMO Bank of Montreal, CIBC, and RBC Royal Bank. Top-performing credit card providers in the credit card financial support index are (in alphabetical order): RBC Royal Bank and TD Canada Trust.

For more information about the Canada Retail Banking Advice Satisfaction Study, visit
https://www.jdpower.com/business/financial-health-and-advice-satisfaction-study.

About JD Power
JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behaviour, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business.

Media Relations Contacts
Gal Wilder, NATIONAL PR; 416-602-4092; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

¹ JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

²JD Power 2023 U.S. Retail Banking Advice Satisfaction Study

 

Most Self-Directed Investor Companies in Canada Failing to Create Fans, JD Power Finds

2023-05-11

jillian.breska

TORONTO: 11 May 2023 — While overall satisfaction with self-directed investor companies in Canada rises to 598 (on a 1,000-point scale)—a 5-point increase from a year ago—the experience is a drag on customer loyalty and advocacy for most brands. According to the JD Power 2023 Canada Self-Directed Investor Satisfaction Study,^SM released today, the industry average Net Promoter Score® (NPS),¹ a measurement that reflects customer loyalty and willingness to recommend a brand to family and friends, is just 7 (on a scale of -100 to +100). This is significantly lower than scores in other areas of financial services in Canada such as full-service investor (31), credit card (28) or banking (23). Interestingly, the low NPS score is prevalent among Canada’s Big 5 banks, while pure do-it-yourself (DIY) investment firms’ average NPS score is four to five times higher than the banks.

“Many DIY investors in Canada initially turn to their banks for their investing needs because of the perceived ease of adding on to their existing relationship,” says Craig Martin, executive managing director and head of wealth and lending intelligence at JD Power. “However, a lot of these customers are having an experience that leaves them ambivalent or negative about the brand. A key issue is that many customers say they aren’t getting a seamless experience across channels. This less-than-optimal experience greatly increases the odds of customers being open to starting a relationship with another provider, especially if there is an obvious benefit like reduced or no fees. Firms won’t necessarily see obvious negative effects because customers are not getting rid of their existing account; they’re just adding a new one. The real danger is longer term, as customers shift their primary wealth relationship away and the better experience builds loyalty to the new firm.”

According to the study, 40% of self-directed investors say they have a less-than-seamless experience with their brokerage across channels and contact methods. This shortfall in delivering superb customer experience is affecting loyalty and pushing investors to shop around, with 11% saying they are not committed to remaining with their current investment brokerage in the next year. Customer loyalty is even lower among Millennials²with only 26% feeling committed to staying with their current investment platform provider and 21% saying they have already decided to switch investment firms or are contemplating the idea.

Following are some key findings of the 2023 study:

• Top pain points: The top three reasons for investors switching firms are high costs/fees (30%); better products, tools and services offered by other providers (17%); and poor service (13%).
• Fee understanding remains a problem: Even after the implementation of CRM2 in Canada, 41% of investors say they do not fully understand their brokerage’s fee structure. More concerning, 56% of Millennials indicate having incomplete understanding of fees. When a customer doesn’t fully understand fees, satisfaction is 107 points lower. Notable, too, is the competitiveness of fees. Nearly one in four (23%) of customers say their firm’s fees are higher than others and only 11% of customers of Big 5 banks say their fees are lower than other firms.
• Millennials are increasingly looking beyond banks: Canada’s Big 5 banks still hold a majority of the DIY investor customer base, with the majority being Pre-Boomers/Boomers (55%), yet pure DIY brokerages are gradually taking a bigger share of the business among younger demographics in which the majority of investors is split between Pre-Boomers/Boomers and Millennials. Among the Big 5, the average NPS for Millennials is 1, while among other firms, the average NPS is 23 for Millennials. 

Study Ranking

Desjardins Online Brokerage (Disnat) ranks highest among self-directed investor firms with a score of 692. National Bank Direct Brokerage (645) ranks second and Questrade (626) ranks third.

The Canada Self-Directed Investor Satisfaction Study, now in its 15^th year, evaluates key satisfaction drivers and firm performance among true do-it-yourself investors (those who do not interact with financial advisors). The study measures satisfaction in seven factors (in order of importance): trust; digital channels; ability to manage wealth how and when I want; products and services; value for fees; people; and problem resolution. 

The study is based on responses from 2,243 investors who make all their investment decisions without guidance from a financial advisor. The study was fielded from October 2022 through January 2023.

For more information about the Canada Self-Directed Investor Satisfaction Study, visit https://www.jdpower.com/business/wealth-management-platform

About JD Power
JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modelling capabilities to understand consumer behaviour, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business.

Media Relations Contacts:
Gal Wilder, NATIONAL PR; Toronto, 416-602-4092; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

¹Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

²JD Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (1995-2004). Millennials (1982-1994) are a subset of Gen Y.