Category: Wealth ManagementCanada

Canada’s Self-Directed Investment Firms at Risk of Losing Millennials, JD Power Finds

2019-06-18

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TORONTO: 19 June 2019 – While overall investor satisfaction with self-directed investment firms in Canada increased slightly in 2019, financial institutions should not rest on their laurels. According to the JD Power 2019 Canada Self-Directed Investor Satisfaction Study,^SM more than one-fourth (27%) of Millennial¹ investors are considering switching providers in the next 12 months.

When it comes to interactions with their financial institution, Millennials are more likely than older investors to rely on mobile technology to engage with investment firms, and to use mobile much differently than older investors.  While Boomers favor tablets, Millennials rely on their phones for a wide range of transactions that go well beyond trading and checking account balances.

“Many investment firms are missing the mark with younger investors when it comes to digital, especially in the mobile experience category,” said Michael Foy, Senior Director of Wealth & Lending Intelligence at JD Power. “Millennials are expecting a seamless digital experience, regardless of the platform. The expectation of young investors is to have a mobile experience that offers full functionality to do anything they can on the website, whether that means executing trades, transferring funds, reviewing their portfolio, or even using tools. Financial institutions that want to build loyalty with this critical segment need to improve the customer experience to reflect investors’ priorities and expectations.”

Following are key findings of the 2019 study:

• Overall satisfaction increases slightly, despite challenging markets: Overall satisfaction is 726 in 2019, up slightly from 723 in 2018.  The survey was fielded in late 2018 when stock markets were closing the year in negative territory and volatility was high, driving down satisfaction with investment performance by 37 points year-over-year, and providing significant headwinds for firms to overcome.
   
• Millennials and mobile: Millennial investors are less engaged with providers on the web as more activity shifts towards mobile. Millennials averaged just 20 online interactions over the past 12 months vs. 35 interactions among Boomers. Among those using the mobile channel, 80% of Millennials who execute trades use their phone for the transaction vs. just 47% of Boomers. Still, just 30% of Millennials and 29% of overall investors indicate they completely understood what mobile features and services were available to them, representing a big opportunity for firms to drive greater engagement.
   
• Fee understanding improves, but millennials lag: A key driver of satisfaction is understanding of fees, which has increased considerably since 2015, perhaps in part due to CRM2-mandated disclosures. In 2015, just 34% of self-directed investors in Canada indicated they “completely” understood fees vs. 50% in 2019. Satisfaction with fees is 157 points higher among those who completely understand vs. those with only partial or no understanding. However, there is a significant gap in complete understanding between Millennials (34%) and Boomers (58%) that likely accounts for lower fee satisfaction among Millennials.
   
• Millennials are aggressive investors, more diverse and more educated: Millennial investors are more likely to be more aggressive with their investments; likely to be female; more likely to have a college degree; less likely to be white; and less likely to be married. Investment firms’ efforts to capture individual client circumstances and preferences to personalize the experience becomes more essential as clients become more diverse and expectations increase based on the personalization that they experience in other industries.

The 2019 Canada Self-Directed Investor Satisfaction Study, now in its 11^th year, evaluates key satisfaction drivers and firm performance for true self-directed investors, those who do not interact with professional advisors.

Study Rankings

Desjardins ranks highest in self-directed investor satisfaction with a score of 753. CIBC Investor’s Edge (745) ranks second, Questrade (740) ranks third and BMO InvestorLine (732) ranks fourth. Desjardins most recently ranked highest in 2017 and had been top-ranked several times previously under the Disnat brand.

The 2019 Canada Self-Directed Investor Satisfaction Study measures self-directed investors’ satisfaction with their investment firm based on performance in seven factors (in order of importance): interaction; account information; commissions and fees; product offerings; information resources; investment performance; and problem resolution.

The 2019 study is based on responses from 1,744 investors who make all their investment decisions without the counsel of a personal financial advisor. The study was fielded from November 2018 through January 2019.

For more information about the 2019 Canada Self-Directed Investor Satisfaction Study, visit https://canada.jdpower.com/resource/canada-self-directed-investor-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable JD Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, JD Power has offices serving North America, South America, Asia Pacific and Europe.

Media Relations Contacts
Gal Wilder, Cohn & Wolfe; 647-259-3261; [email protected]
Sandy Caetano, Cohn & Wolfe; 647-259-3288: [email protected]
Geno Effler, JD Power; Costa Mesa, Calif.; 714-621-6224; [email protected] 

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

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¹JD 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.

 

 

Against a Backdrop of Volatile Markets and Poor Returns Canada’s Full-Service Investment Firms See Investor Satisfaction Tumbling, JD Power Finds

2019-04-12

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TORONTO: 15 April 2019 — Following a rocky 2018 in capital markets and negative investment yields, investors in Canada who are edgy about their financial holdings have less satisfaction with their investment firm, according to the JD Power 2019 Canada Full Service Investor Satisfaction Study,^SM released today. For the first time since the 2008 financial crisis, customer satisfaction has declined, dropping to 778 (on a 1,000-point scale) from 785 in 2018.

“There’s a belief in the industry that challenging market conditions are when financial advisors most demonstrate their value to clients,” said Mike Foy, Senior Director of Wealth Intelligence at JD Power. ”But what we see is that many advisors are not consistently having the sometimes difficult conversations necessary to manage client expectations and navigate through market volatility and downturns.”

According to the study, nearly one-third (32%) of investors say their advisor did not take the time to explain their portfolio performance during the past year. Investors not receiving an advisor explanation are almost twice as likely as those who receive an explanation (36% vs. 19%, respectively) to indicate their financial performance was “worse than expected” and were significantly less satisfied with both that performance and their advisor.

The study also finds that the largest declines in performance satisfaction are among affluent investors (those with assets greater than $500,000), dropping 38 points year over year. More than one-fourth (28%) of affluent investors indicate performance was “worse than expected” and, among that group, 16% intend to decrease their investments during the next 12 months vs. just 4% among affluent investors who say performance was “as expected” or “better than expected.”

“Market conditions may be outside the control of investment firms and advisors, but they do have a significant ability to control how investors react to those conditions, and they need to be providing that transparency to help clients stay focused on long-term goals,” Foy said.

Following are some of the key findings of the 2019 study:

• Older investors much more concerned about financial wellness: About one in six (16%) of Pre-Boomers¹ and Boomers indicate they are “worse off” financially than they were a year ago, up from 9% in 2018.  Among Millennials and Gen X, 8% perceive they are “worse off” in 2019 vs. 6% in 2018.
   
• Fee understanding still elusive: Despite nearly half (48%) of investors indicating they have noticed changes in the information provided by their firm due to CRM2, the percentage of those who say they have “complete” understanding of fees remains stubbornly low at just 31%, down slightly from 32% last year and significantly trailing the 40% among U.S. full service investors, according to the JD Power 2019 Full Service Investor Satisfaction Study.^SM
   
• Mobile Matters: Among Boomers and Pre-Boomers, just 29% interacted with their investment firm via mobile, but that number jumps to 68% among Millennials and younger investors. Millennial mobile usage also skews much more toward phone usage than tablet usage, suggesting firms need to ensure their mobile apps are evolving to meet the different needs and expectations of younger-generation investors.

Study Rankings

Edward Jones (807) ranks highest in overall investor satisfaction for a seventh consecutive year and Assante (796) ranks second. BMO Nesbitt Burns, CIBC Wood Gundy and Raymond James rank third in a tie with 784.

The Canada Full Service Investor Satisfaction Study measures overall investor satisfaction with full-service investment firms in eight factors (in order of importance): financial advisor; firm interaction; account information; information resources; product offerings; investment performance; commissions and fees; and problem resolution.

The 2019 study is based on responses from 3,947 investors who make some or all of their investment decisions with a financial advisor regarding their primary investment account. It was fielded from November 2018 through January 2019.

For more information about the 2019 Canada Full Service Investor Satisfaction Study, visit https://canada.jdpower.com/resource/canadian-full-service-investor-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable JD Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, JD Power has offices serving North America, South America, Asia Pacific and Europe.

Media Relations Contacts
Gal Wilder, Cohn & Wolfe; 647-259-3261; [email protected]
Sandy Caetano, Cohn & Wolfe; 647-259-3288: [email protected]
Geno Effler, JD Power; Costa Mesa, Calif.; 714-621-6224; [email protected]

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

¹JD Power defines the 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.

 

 

Canadian Self-Directed Investment Firms Not Connecting with Investors on Mobile Experience, JD Power Finds

2018-09-11

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TORONTO: 13 Sept. 2018 — Customer satisfaction with self-directed investment firms is lagging among investors in Canada when it comes to mobile experience, according to the JD Power 2018 Canadian Self-Directed Investor Satisfaction Study.^SM As nearly two-thirds (64%) of investors do not use their firm’s mobile app and fewer than one-third (31%) say they have a complete understanding of available mobile services, overall satisfaction is lowest in this channel (742 on a 1,000-point scale), compared with satisfaction in the online (774) and phone (779) channels.

“Investment firms in Canada in general are significantly behind the curve when it comes to their mobile app offerings, capabilities and customer engagement,” says Mike Foy, Senior Director of the Wealth Management Practice at JD Power. “Investors are increasingly looking to mobile platforms, not only for convenient trade execution but also to access account information; do research; transfer funds; use planning tools; and receive customized alerts and notifications from their firms. Firms that can deliver a robust and intuitive experience—ideally integrated across investment and other financial needs such as banking—will have a huge advantage over competitors.”

The low satisfaction level associated with self-directed investment apps is even further evident in comparison with the retail banking sector in Canada, in which 49% of customers have adopted bank mobile services, and the mobile channel has the highest satisfaction level among all channels (832).  

“Taking into account how critical mobile is for consumers and considering where the next pool of investors will come from, it is critical for self-directed investment firms to focus and improve their mobile offerings and user experience, as this is the channel Millennials and younger generations will use,” Foy added.

Following are some key findings of the 2018 study:

• Millennials[1] present business risk and opportunity: Nearly one in five (17%) Millennial investors cite a likelihood to switch to another firm during the next year. On the flip side, nearly four in 10 (36%) of investors in this age group also acknowledge plans to increase the amount they invest in the next 12 months.

• Affluent investors more fee-sensitive in firm selection: While more than one-third of mass market[2] and mass affluent investors choose their investment firm based on previous relationships (such as the retail banking arm), fewer than one in five (18%*) of affluent investors do. The latter are much more likely to be influenced by low fees (39%*) and are much more likely than less affluent investors to cite the firm’s reputation for service (13%* vs. 4% respectively). 

• Ongoing need for greater fee transparency: While trading fees have decreased significantly in recent years, and CRM2-mandated disclosures have ostensibly increased and improved the fees information available to investors, most investors still don’t understand their fees.  Despite four in five (80%) indicating fees have been explained to them, just 44% of investors say they have a complete understanding.

Study Rankings

BMO InvestorLine ranks highest in self-directed investor satisfaction, with a score of 739. Desjardins Online Brokerage and CIBC Investor’s Edge rank second in a tie with a score of 735 each. Questrade ranks fourth with a score of 732.

The 2018 Canadian Self-Directed Investor Satisfaction Study was fielded in May-June 2018 and is based on responses from more than 2,100 investors who do not work with a financial advisor at their primary investment firm.

For information about the Canadian Self-Directed Investor Satisfaction Study, visit http://canada.jdpower.com/resource/canadian-self-directed-investor-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable JD Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, JD Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. JD Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.

Media Relations Contacts
Gal Wilder, Cohn & Wolfe, Toronto, Canada; 647-259-3261, [email protected]
Sandy Caetano, Cohn & Wolfe; Toronto, Canada; 647-259-3288, [email protected]
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]

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

 

Has CRM2 Missed the Mark? Most Investors in Canada Unaware of or Unfamiliar with New Fee and Performance Disclosures, JD Power Finds

2018-08-14

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TORONTO: 16 Aug. 2018 — Although the new reporting and disclosure rules requiring wealth management firms to share new information about fees and portfolio performance (CRM2) have now been in full effect for more than a year, 79% of investors in Canada are still unaware of CRM2. Furthermore, according to the JD Power 2018 Canadian Full Service Investor Satisfaction Study,SM even among those relatively few investors who are aware of the initiative, slightly fewer than half (49%) have actually noticed the associated changes in the reporting.

“The low awareness and understanding of CRM2 poses an ongoing challenge and opportunity for firms and financial advisors,” said Mike Foy, Senior Director of the Wealth Management Practice at JD Power. “While the industry’s concern that the new fee and performance reporting would trigger an exodus of investors hasn’t materialized, the risk of defections still exists. The study suggests that the best way to address that risk is for advisors to be proactively and regularly discussing fees and performance with their clients, rather than leaving them to figure it out on their own.”

The study shows that investors who are aware of CRM2 and have noticed the changes in the reporting format, as well as had their advisor explain the fees within the past 12 months, are not only much more likely than investors overall to understand their fees (55% vs. 32%, respectively, indicate “complete understanding”), but they are also much more loyal to their firm (58% “definitely will” remain with their firm for the next 1-2 years vs. 46%) and are more likely to recommend their firm (53% vs. 37%).

“Advisors continue to be critical of CRM2 achieving goals of greater investor understanding of fees and performance,” Foy said, adding, “and the greater risk for both advisors and firms remains with inaction rather than taking action to engage with clients.”

Following are key findings of the 2018 study:

• Evolving role of the advisor: The role of the financial advisor as well as client expectations are changing, depending in part on the investor’s age. While 15% of Boomers[1] consider themselves “Delegators”—those who cede all decisions to their financial advisors—only 10% of Millennials do the same.  Meanwhile, 39% of Millennials consider themselves “Validators,” those who consider their advisor more of a sounding board for their own ideas, vs. just 24% of Boomers.

• Mobile is lagging: More than three-fourths (77%) of investors have not used or have only tried using their wealth management mobile app once. This is a very low adoption and usage rate, compared with other channels as well as other industries. Those who have used the mobile channel rate their experience significantly lower (satisfaction of 716, on a 1,000-point scale) vs. other channels such as phone (808) and online/web (792), suggesting that firms have significant work to do to improve the mobile user experience as well as driving engagement.  

• Millennials embrace robo-advisors to save on fees: While awareness of robo-advisors is comparable among Boomers (43%); Gen X (45%); and Millennials (48%), it is the latter who are much more likely to adopt the technology. Nearly one-fourth (22%) of Millennials have used a robo-advice service, compared with only 9% of Gen X investors and 3% of Boomers. More than half (52%) of Millennials using robo-advisors attributed their usage to a desire for lower fees.

Study Rankings

Edward Jones ranks highest in overall satisfaction for a sixth consecutive year, with a score of 799. Assante Wealth Management (796) ranks second, while HollisWealth and National Bank Financial rank third in a tie (794 each). In 2018, overall satisfaction is 785, up from 771 in 2017.

The 2018 Canadian Full Service Investor Satisfaction Study measures overall investor satisfaction with full-service investment firms and financial institutions that offer wealth management and private banking services. The study was fielded in May-June 2018 and is based on responses from more than 4,400 investors who work with a financial advisor on their primary investment account.

For information about the Canadian Full Service Investor Satisfaction Study, visit http://canada.jdpower.com/resource/canadian-full-service-investor-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable JD Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, JD Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. JD Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.

Media Relations Contacts
Gal Wilder, Cohn & Wolfe, Toronto, Canada; 647-259-3261, [email protected]
Sandy Caetano, Cohn & Wolfe; Toronto, Canada; 647-259-3288, [email protected]
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]

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

 

Investors Still Do Not Understand Fees, Despite CRM2 Disclosures, JD Power Finds

2017-08-15

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TORONTO: 17 Aug. 2017 — One full year after sweeping regulatory reforms went into effect requiring investment advisory firms in Canada to disclose more information about their fees to clients, most investors still do not understand these fees. According to the JD Power 2017 Canadian Full Service Investor Satisfaction Study,^SM released today, fewer than one-fourth of investors report having a complete understanding of the fees they pay to their investment advisors.

“Disclosure is not the same as transparency,” said Mike Foy, Senior Director of the Wealth Management Practice at JD Power. “Yes, investment firms in Canada have to disclose more information about their fees in line with the new Client Relationship Model (CRM2) requirements, but our data shows that the message is not always getting through clearly enough. Establishing a clear link between fees charged and value provided is very important for full-service advisors, especially now as they confront new threats coming from generational and technological changes that have put a large chunk of customer assets at risk of attrition.”

Following are some of the key findings of the study:

• Fees still a mystery: Fewer than one-fourth (23%) of investment advisory clients noticed any change during the past year in how fees and performance information was communicated by their advisory firm. The number of investors reporting complete understanding of fees is just 24%, down from 27% in 2016. Investors with complete understanding of fees are much more likely to recommend their firm, with 55% identified as Promoters[1] vs. just 36% among those with less than complete understanding.     

• Advisors missing the mark: More than one-third (36%) of clients report that their financial advisor did not clearly communicate the reasons for the performance of their investments and 41% report that their advisor did not explain fees. Even among clients who were aware of the new disclosure requirements and did have a conversation about the subject with their advisor, just 35% say they fully understand their fees.

• Millennial money in motion as robo-advisors gain foothold: Although they currently represent just 5% of all full-service investors, 21% of affluent Millennials (those born between 1982 and 1994 with $100,000+ in investable assets) say they either “definitely will” or “probably will” leave their current firm in the next 12 months. Millennials also are most likely to have used a robo-advisor (23%), suggesting even investors who want to retain a traditional advisor may be open to reallocating some assets to alternative, less expensive advice channels.

Study Rankings

Edward Jones ranks highest in investor satisfaction with full-service investment firms in Canada for a fifth consecutive year, with a score of 819 on a 1,000-point scale. Edward Jones ranks highest among all firms in two of the six key factors driving satisfaction: financial advisor and investment performance. Following in the rankings are Assante Wealth Management (811) and ATB Financial (807).

The 2017 Canadian Full Service Investor Satisfaction Study measures overall investor satisfaction with full-service investment firms and financial institutions that offer wealth management and private banking services in seven factors (in order of importance): financial advisor (33%); account information (18%); investment performance (18%); product offerings (14%); commissions and fees (10%); website (5%); and problem resolution (3%).

The study is based on responses from 4,903 investors who use advice-based investment services from financial institutions in Canada and was fielded in May-June 2017.

For information about the Canadian Full Service Investor Satisfaction Study, visit http://canada.jdpower.com/resource/canadian-full-service-investor-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable JD Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, JD Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. JD Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.

Media Relations Contacts
Gal Wilder, Cohn & Wolfe; Toronto, Canada; 647-259-3261; [email protected]
Jennifer McCarthy, Cohn & Wolfe; Toronto, Canada; 647-259-3305, [email protected]
Geno Effler, JD Power; Costa Mesa, Calif.; 714-621-6224; [email protected]

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

 

Seeking More Guidance, Self-Directed Investors Turn to Robots, JD Power Study Finds

2016-09-20

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TORONTO: 26 Sept. 2016 — As many current self-directed investors show a strong interest in receiving more guidance from their firms, robo-advisors may provide a viable, low-cost alternative to going it alone or working with a traditional full-service advisor, according to the JD Power 2016 Canadian Self-Directed Investor Satisfaction Study,^SM released today.

Robo-advisors provide automated portfolio management services at a relatively low cost. While several firms already offer such services, there still is limited investor awareness and understanding of this alternative.

“The robo-advisor market in Canada is still relatively small, but there are a number of factors likely to drive continued growth,” said Mike Foy, director of the wealth management practice at JD Power. “Millennials are now the largest segment of the workforce and are not only more comfortable than their parents with technology-based solutions, but they are also more likely to be looking for guidance as they accumulate wealth and their financial lives become more complex.”  

According to study findings, the appeal of robo-advisors is highest among Millennial investors,[1]  66% of whom indicate they would be interested in robo-advice if their firm offered it, compared with 54% of all investors. The percentage of Millennials who indicate they have actually used a robo-advisor is nearly double that of the overall market (11% vs. 6%, respectively), and among those Millennials who have used a robo-advisor, 54% are either equally satisfied or more satisfied with their robo-advisor experience as they are with their primary self-directed firm.

The study also finds that despite all the attention on Canada’s Client Relationship Management (CRM2) regulatory initiative to drive investor transparency, little-to-no progress is evident in terms of increasing investor understanding of fees.

“The needle really hasn’t moved in five years,” Foy said. “In 2012, only 39% of self-directed investors said they completely understood the fees they were paying, and in 2016 it’s still 39%. Increased disclosure does not automatically create transparency. Firms need to ensure they are explaining information effectively, as we see a very strong correlation between understanding and satisfaction when it comes to fees.”    

Following are additional findings of the 2016 study:

• Millennials Seeking Guidance: Among Millennial self-directed investors, 37% indicate they also have a secondary full-service investment account, compared with 24% of Boomers. Among Millennial who do not, 21% say they expect to need one in the future. They are also much more likely to use planning tools and attend educational seminars.
• Satisfaction Drives Referrals as Well as Loyalty: On average, investors in the mid-range of satisfaction (overall satisfaction scores of 700-799) make 1.3 net positive comments about their firm, while those in a higher range of satisfaction (800-899) more than double that at 2.7 net positive comments. Referrals double again among those in a satisfaction tier above 900, making an average of 5.2 net positive comments.
• Cross-Channel Opportunity: If dissatisfied with their fees, 59% of Millennials indicate they would switch from a full-service advisor to a self-directed provider, compared with 49% of Boomers who say the same.

Study Rankings

National Bank Direct Brokerage ranks highest in self-directed investor satisfaction for a second consecutive year, with a score of 774 (on a 1,000-point scale), and performs particularly well in the interaction, account information and product offering factors. Following in the rankings are BMO InvestorLine (762), CIBC Investor’s Edge (751) and RBC Direct Investing (751).

About the Study

The 2016 Canadian Self-Directed Investor Satisfaction Study, now in its eighth year, measures investor satisfaction among those who do not work with an advisor for their primary account with their  brokerage firm across six key factors (in order of importance): interaction; account information; trading charges and fees; product offerings; information resources; and problem resolution. Scores are calculated on a 1,000-point scale. Due to methodology changes to the study, previously known as JD Power Canadian Direct Brokerage Investor Satisfaction Study, results from 2016 cannot be compared to previous years.

The study includes responses from more than 2,800 investors who primarily invest with self-directed investment platform providers in Canada. The study was fielded from May through June 2016.

Media Relations Contacts

Gal Wilder; Cohn & Wolfe; Toronto, Canada; 647-259-3261; [email protected]

Jenn McCarthy; Cohn & Wolfe; Toronto, Canada; 647-259-3305; [email protected]

John Tews; JD Power; Troy, Mich., USA; 248-312-4119; [email protected]

For more information about the JD Power 2016 Canadian Self-Directed Investor Satisfaction Study, visit http://canada.jdpower.com/resource/canadian-self-directed-investor-satisfaction-study

See the online press release at http://www.jdpower.com/pr-id/2016178.

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

 

Many Canadian Investors May Be Wondering
What They’re Paying Their Advisors For

2016-08-17

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TORONTO: 18 Aug. 2016 — Despite Canada’s wealth management industry promoting a goals-based approach to advice, nearly half of full service Canadian investors say their advisors fail to deliver on even the first stage of that process, which helps them set goals that reflect their risk tolerance, according to the JD Power 2016 Canadian Full Service Investor Satisfaction Study,℠ released today.

The study identifies three broad stages of goals-based investing: setting personal goals; implementing a strategy to achieve those goals; and monitoring progress. Only slightly more than half (54%) of investors indicate their advisor helped set goals and discussed risk. Barely one-third (34%) say their advisor effectively delivered on all three stages.

“These results don’t speak well for the industry as a whole,” said Mike Foy, director of the wealth management practice at JD Power. “Investors have some newer, more compelling lower-cost alternatives available to them, including robo-advisor. In addition, with CRM2-mandated fee disclosures beginning to roll out, many investors will be learning for the first time exactly what they have been paying for. Advisors who aren’t adding value for their clients beyond asset allocation may be in real trouble.” 

In addition to changes in technology and regulatory requirements, wealth management firms are contending with shifting investor demographics and psychographics. Younger investors have a different set of preferences and expectations than older investors. JD Power research shows that 42% of Millennial[1] investors want to play a more active role in the management of their wealth than previous generations. These so-called “validators” want to make their own decisions but still have access to an advisor for guidance and to act as a sounding board. Older generations such as Boomers are more likely to describe themselves as “collaborators” or “delegators,” who defer to their advisor’s judgments and decisions.

“Wealth management firms and advisors must be cognizant of the increasing prevalence of the validator investor mindset and the challenges it presents,” Foy said. “It doesn’t necessarily mean advisors become less important, but the role they play for investors may be different. They can’t just manage portfolios—the best advisors of the future will need to be part coach, part teacher and part financial therapist.”

Following are additional findings of the 2016 study:

• Fee Transparency Remains Elusive: Despite all the attention on transparency around fees with CRM2, just 27% of investors say they “completely” understand their fees, down from 30% in 2012. Advisors can help: among investors who say their advisor provided an explanation of their fees in addition to a firm-provided summary (e.g., in an account statement), the number goes up to 43% (vs. 11% of those who only received a summary).
• Rise of the Robots: Robo-advisors are somewhat of a novelty to investors. But nearly one-third (30%) say they’d be interested if their firm offered such a solution, rising to 45% of Millennials.
• Beating the Big Banks: Top independent wealth management providers included in the study continue to outperform the big banks as a group, with Edward Jones and Raymond James Ltd. ranking highest and second highest, respectively, in overall investor satisfaction.

Study Rankings

Edward Jones ranks highest in investor satisfaction with full service investment firms in Canada for a fourth consecutive year, with a score of 802 on a 1,000-point scale. Edward Jones’ performance is highest across all four of the most critical factors driving satisfaction: financial advisor, account information, investment performance and product offerings. Following in the rankings are Raymond James Ltd. (779) and HollisWealth (776).

About the Study

The 2016 Canadian Full Service Investor Satisfaction Study measures overall investor satisfaction with full service investment firms and financial institutions that offer wealth management and private banking services in seven factors (in order of importance): financial advisor (34%); account information (19%); investment performance (18%); product offerings (14%); commissions and fees (10%); website (4%); and problem resolution (2%). Satisfaction is calculated on a 1,000-point scale.

The study measures overall satisfaction of investors who JD Power defines as “full service.” This group includes investors who receive a range of different service levels offered by various full-service brokerages and wealth management firms included in this study. In previous years, only TD Wealth’s Private Investment Advice clients were included in the study; this year’s study was modified to include a wider range of TD Wealth clients. Because of the change in methodology, TD’s overall year-over-year scores cannot be directly compared.

The study is based on responses from 5,159 investors who use advice-based investment services from financial institutions in Canada and was fielded in May and June 2016.

Media Relations Contacts

Gal Wilder; Cohn & Wolfe; Toronto, Canada; 647-259-3261; [email protected]

Jenn McCarthy; Cohn & Wolfe; Toronto, Canada; 647-259-3305; [email protected]

John Tews; JD Power; Troy, Mich., USA; 248-312-4119; [email protected]

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

 

Is Your Next Investment Advisor a Robo-Advisor?

2015-09-16

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TORONTO: 21 September 2015 —Discount brokerage firms need to deliver greater value to investors via tools that provide guidance such as automated portfolio management or “robo-advice.” While not yet widely adopted or even understood by investors, robo-advice has significant appeal, especially among Gen Y/Z[1] investors, according to the JD Power 2015 Canadian Discount Brokerage Investor Satisfaction Study^SM released today.

The study, now in its seventh year, measures investor satisfaction with their primary discount brokerage firm across six key factors (in order of importance): interaction; account information; trading charges and fees; product offerings; information resources; and problem resolution. Scores are calculated on a 1,000-point scale. Overall satisfaction with discount brokerage firms is 729, a 7-point decline from 2014.

For more information about the 2015 Canadian Discount Brokerage Investor Satisfaction Study, please visit http://canada.jdpower.com/resource/canadian-discount-brokerage-investor-satisfaction-study

Firms that perform well in overall investor satisfaction are not necessarily the lowest priced, but are firms that effectively develop “guidance-based” relationships with their clients. The key elements of those relationships include effective communications, useful digital tools and access to relevant educational resources. Satisfaction is 848 when investors are contacted two or more times by their firm about products and services, when they use at least one financial planning and one tracking/monitoring tool, and are aware of such educational resources as seminars/webinars. In contrast, satisfaction among investors for whom none of these are met is only 645.

For investors seeking more guidance and support but who do not want a traditional full service advisor, the robo-advisor may be a good fit. Robo-advisors provide automated portfolio management services, including periodic re-balancing, at a relatively low cost based on assets. Several firms offer such tools already, but there is still limited awareness of this capability among investors, with 22 percent indicating they are aware of its existence. However, 56 percent of investors indicate they would be interested if their firm provided it, and interest climbs to 67 percent among Gen Y/Z investors.

“Robo-advisors have created a lot of buzz in the industry and could really take hold, especially with Gen Y/Z investors, if firms can get the pricing right and effectively communicate the value to those investors looking for guidance but not interested in or willing to pay for a full service advisor,” said Mike Foy, director of the wealth management practice at JD Power. “It could also help take some market share from full service providers over time, especially as investors begin to get more insight into their account fees and portfolio performance as key milestones for the CRM2[2] regulatory mandate approach.”

KEY FINDINGS

• The relative importance of commissions and fees as a driver of satisfaction has decreased, as the average cost per trade has declined for a third consecutive year ($11.08 in 2015 from $13.44 in 2014). Differences in pricing have also decreased significantly in recent years, with the gap between reported fees for the highest- and lowest-performing firms in the study declining by nearly 50 percent since 2012. 
• Firms need to do a better job of providing greater fee transparency. Just 35 percent of investors say they “completely” understand their fees, down from 42 percent in 2014. Satisfaction is significantly higher among investors whose firm has provided an explanation of fees than among those whose firm did not (765 vs. 678, respectively).
• Providing an outstanding discount brokerage investor experience generates high levels of retention, advocacy and investment levels, and firms should be proactive in efforts to increase satisfaction. The study finds that 68 percent of highly satisfied investors (overall satisfaction scores of 900 or higher) say they “definitely will not” switch firms; 74 percent say they “definitely will” recommend their firm; and 45 percent say they have increased the amount invested with their primary firm in the past 12 months.  However, when firms are complacent and investors are less satisfied (overall satisfaction scores of 700-799), just 29 percent say they “definitely will not” switch firms; 18 percent say they “definitely will” recommend their firm; and 36 percent say they have increased the amount invested with their primary firm in the past 12 months.
• While website remains the primary point of interaction for investors, providing a seamless multi-channel experience drives satisfaction higher when adding touch points such as live phone (+25), investment centre (+33) or mobile (+41).

Discount brokerage investment firm rankings

National Bank Direct Brokerage ranks highest in discount brokerage investor satisfaction with a score of 753, and performs particularly well in the interaction, account information and product offerings factors. Following in the rankings are BMO InvestorLine (736); TD Direct Investing (734); and RBC Direct Investing (733).

The 2015 Canadian Discount Brokerage Investor Satisfaction Study includes responses from more than 2,700 investors who use investment services with discount brokerage firms in Canada. The study was fielded from May 4, 2015, through June 1, 2015.

Media Relations Contacts

Gal Wilder; Cohn & Wolfe; Toronto, Canada; 647-259-3261; [email protected]

Beth Daniher; Cohn & Wolfe; Toronto, Canada; 647-259-3279; [email protected]

John Tews; JD Power; MI, USA; Tel: +1-248- 580-6218; [email protected]

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

About McGraw Hill Financial www.mhfi.com 

 

Transparency Drives Investor Satisfaction, Yet Investment Firms Aren’t Proactively Explaining Fees In Canada

2015-08-17

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TORONTO: 20 August 2015 — Despite the recent CRM2[1] regulatory mandate requiring increased transparency around investment fees and performance, investment firms have generally been slow or ineffective in ensuring advisors are proactively explaining fees and performance to their clients, missing a critical opportunity to build trust and loyalty, according to the JD Power 2015 Canadian Full Service Investor Satisfaction Study^SM released today.

The study provides benchmarks of satisfaction that allow individual investment firms in Canada to compare their performance with other firms included in the study. Overall investor satisfaction with full service investment firms and financial institutions that offer wealth management and private banking services is measured in seven factors (in order of importance): investment advisor (39%); investment performance (18%); account information (17%); product offerings (14%); commissions and fees (8%); website (3%); and problem resolution (1%). Overall satisfaction is 764 (on a 1,000-point scale), up by 9 points from 2014.

Transparency for investors around fees and account performance remains a big challenge for the wealth management industry. Three in four (75%) investors do not completely understand the commissions and fees they pay their firm, and 45 percent indicate their firm hasn’t provided them with a summary of fees and commissions charged. In terms of advisor guidance, 43 percent of investors do not receive an explanation of the firm’s fee structure and 33 percent do not receive an explanation of their investment performance.

“Firms are increasingly required to provide investors with greater transparency on both fees and performance. Advisors should view this as an opportunity to deepen their relationship with clients by having discussions that provide appropriate context,” said Mike Foy, director of the wealth management practice at JD Power. “For example, advisors need to make sure investors understand the value of what they’re getting for what they pay, and advisors also need to evaluate portfolio performance relative to staying on track toward achieving personal goals instead of trying to beat the market. This approach provides a much more satisfying client experience than when an investor simply receives a mandated transparency report with details that don’t provide any meaningful explanations.”

According to the study, transparency increases satisfaction, especially when advisors take the time to explain the fees. Satisfaction increases by 62 points, on average, when firms provide a summary of fees, compared to when they don’t (792 vs. 730, respectively), and improves by 87 points when advisors provide an explanation of fees, compared to when they don’t (801 vs. 714). Satisfaction is higher among fee-based investors than among commission-based investors (784 vs. 764, respectively). Additionally, fee-based investors tend to be less negatively impacted by mandated disclosures, since commission-based accounts often include embedded fees paid by the mutual fund companies that investors may not know about.

KEY FINDINGS

• Providing an outstanding overall investor experience generates high levels of retention, advocacy and referrals—all critical drivers of new business. The study finds that 76 percent of highly satisfied investors (overall satisfaction scores of 900 or higher) say they “definitely will” recommend their firm; 72 percent say they “definitely will not” switch firms; and 28 percent say they “intend to increase” the amount invested with their primary firm.
• Investment advisor satisfaction is lowest among younger investors (Gen Y/Z[2]) at 768 and highest among older investors (Pre-Boomers, Boomers and Gen X) at 835, suggesting firms need to better understand and adapt to the needs and priorities of Gen Y/Z investors as these segments grow.
• Gen Y/Z investors have significantly different expectations and preferences in how they work with an advisor compared with all other generational groups. Four in 10 (42%) full service investors in Gen Y/Z consider themselves “validators,” or those who like to actively come up with their own investment ideas and use an advisor as a sounding board; 49 percent say they are “collaborators,” those who collaborate with an advisor and depend on their guidance and advice; and 10 percent are “delegators”—those who prefer to depend on their advisor to make decisions on their behalf. Among Pre-Boomers, Boomers and Gen X investors, just 26 percent, in aggregate, consider themselves “validators”; 63 percent “collaborators”; and 11 percent “delegators.”
• Advisors are missing an opportunity to connect with investors about the needs of their next-generation beneficiaries. Gen Y/Z investors will continue to increase in importance as the enormous intergenerational transfer of wealth occurs over the coming decades. Just 29 percent of investors say their advisor has asked about the needs of their beneficiaries, with satisfaction 40 points higher among those whose advisors have asked. 

Investment Firm Rankings

Edward Jones ranks highest in investor satisfaction with full service investment firms in Canada for a third consecutive year, with a score of 804, which is a 13-point increase from 2014. Edward Jones performs particularly well in three factors: investment advisor; investment performance; and product offerings. Following in the rankings are TD Wealth Private Investment Advice and Raymond James Ltd. (799 and 795, respectively).

The 2015 Canadian Full Service Investor Satisfaction Study is based on responses from 4,827 investors who use advice-based investment services from financial institutions in Canada. The study was fielded in May and June 2015.

Media Relations Contacts

Gal Wilder; Cohn & Wolfe; Toronto, Canada; 647-259-3261; [email protected]

Beth Daniher; Cohn & Wolfe; Toronto, Canada; 647-259-3279; [email protected]

John Tews; JD Power; Troy, Mich; 248-312-4119; [email protected]

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

About McGraw Hill Financial www.mhfi.com 

 

After an Increase in Trading among Canadian Investors Using Discount Brokerage Firms, Overall Satisfaction Increases for a Third Consecutive Year

2013-09-23

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TORONTO: 23 September 2013 — Investors in Canada are conducting more trades and increasing the amount of their investments as overall satisfaction with discount brokerage firms improves, according to the JD Power 2013 Canadian Discount Brokerage Investor Satisfaction Study^SM released today.

Key Findings

• Overall investor satisfaction with discount brokerage firms in Canada increases to 724, up 24 points from 2012.
• Overall satisfaction is 48 points higher when mobile access is offered to investors for trading and setting and managing alerts.
• Forty-four percent of highly satisfied investors plan to increase the amount of their investments with their discount brokerage firm.

A transition has been occurring in the Canadian investment market year over year, as the percentage of investors with only discount brokerage accounts has increased to 33 percent in 2013 from 21 percent in 2012. Among investors with discount brokerage accounts, the percentage of moderately active traders–those who make between one and 12 trades per year–has increased to 58 percent in 2013 from 46 percent in 2012, while the amount of their investable assets has increased to a median of $141,191, up from $133,665.

With more active trading, overall investor satisfaction with discount brokerage firms in Canada increases for a third consecutive year and is 724 (on a 1,000-point scale) in 2013, up 24 points from 2012 and 45 points since 2011. In comparison, self-directed investor satisfaction in the United States averages 752, down from 768 in 2012, according to the JD Power 2013 U.S. Self-Directed Investor Satisfaction Study.^SM

“More investors are making trades in Canada, and they appear to be recognizing the value their discount brokerage firm is able to provide,” said Craig Martin, director of investment services at JD Power. “As markets rise, investors want to be a part of the growth. The effectiveness of discount brokerage firms in educating their investors regarding the available opportunities, and in turn increasing their confidence in investing, is paying dividends. Conversely, in the United States, overall satisfaction with self-directed brokerage firms has declined despite the market’s improvement, as investing attitudes and behaviors have not yet shifted among a substantial portion of the population.”

The study, now in its fifth year, measures investor satisfaction with their primary discount brokerage firm across six key factors (in order of importance): interaction; trading charges and fees; account information; account offerings; information resources; and problem resolution.

Interaction is crucial to overall investor satisfaction, which raises the importance of brokerage firms’ websites. The website’s appearance, ease of use, clarity of information and speed of executing a trade are critical to investors who are managing their own investments. That said, interaction satisfaction is largely dependent on the type investor. Satisfaction with discount brokerage websites is highest among active traders–those who make more than 12 trades per year–partially due to more frequent use of their firm’s website and the focus that many sites place on trading. Less active traders often are looking for guidance and information rather than trading tools so they find themselves struggling to locate their desired information.

“Brokerage firms need to make sure their website meets the key needs of the different types of investors they serve,” said Martin. “Investors who make a lot of trades need and value different capabilities and options than do less-active investors. Treating all investors the same is likely to result in dissatisfying a large proportion of them.”

The study finds that overall satisfaction is 48 points higher when mobile access is offered to investors for trading and setting and managing alerts. While investors value online tools, phone interaction continues to be an important part of the experience. More than one-half (52%) of investors have called to talk to a representative about their account, ask a question or perform other tasks in the past 12 months, with 26 percent making trades over the phone.

“A key element of an outstanding investor experience, which also creates loyalty, is effectively communicating in a way that ensures investors are aware of the resources available and how those resources add value to the investing experience,” said Lubo Li, senior director of the financial services practice at JD Power, Toronto. “In a business where word of mouth is the best advertising, loyal investors are critical to the long-term success of brokerage firms.”

The study finds that 71 percent of highly satisfied investors (overall satisfaction scores of 900 and above) say they “definitely will” stay with their primary discount brokerage firm for at least the next year and 44 percent plan to increase the amount they invest, while only 43 percent of satisfied investors (overall satisfaction of 700 to 899) say they “definitely will” stay with their firm and 33 percent plan to increase their investments. Additionally, 71 percent of highly satisfied investors say they “definitely will” recommend their brokerage firm to family and friends, compared with just 30 percent of satisfied investors.

“It may be an obvious point, but an investor’s wealth is likely to grow over time, so today’s investors who make a few trades will likely be active investors of the future. The average tenure for investors is 11 years, making it clear that waiting until investors become active investors or have accumulated substantial wealth before ensuring a great experience is a risky proposition,” said Li.

Discount Brokerage Investment Firm Rankings

National Bank Direct Brokerage ranks highest in discount brokerage investor satisfaction with a score of 757, and performs particularly well in the interaction, account information and account offerings factors. Following in the rankings are Disnat (750); BMO InvestorLine (742); and TD Direct Investing (734).

JD Power offers the following tips to investors selecting a discount brokerage firm:

• Leverage the tools and resources, such as educational seminars, available from your investment firm to help you research, analyze and invest more prudently.
• Make sure your investment firm knows your preferred method of contact–e.g., email, phone or mail–so you will receive all communications in a timely manner.
• Consider increasing the interaction with your investment firm’s local investment centre, which is an excellent resource for investment guidance.

The 2013 Canadian Discount Brokerage Investor Satisfaction Study includes responses from more than 3,000 investors who use investment services with discount brokerage firms in Canada. The study was fielded from May through June 2013.

About JD Power

JD Power is a global marketing information services company providing performance improvement, social media and customer satisfaction insights and solutions. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. Headquartered in Westlake Village, Calif., JD Power has offices in North America, Europe and Asia Pacific. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. JD Power is a business unit of McGraw-Hill Financial.

About McGraw Hill Financial

McGraw Hill Financial (NYSE: MHFI) is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company’s iconic brands include: Standard & Poorís Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, JD Power, and McGraw Hill Construction. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.com. 

Media Relations Contacts:

Gal Wilder; Cohn & Wolfe; Toronto, Canada; (647) 259-3261; [email protected]
Beth Daniher; Cohn & Wolfe; Toronto, Canada; (647) 259-3279; [email protected]
John Tews; JD Power; Troy, Mich.; (248) 680-6218; [email protected]

Follow us on Twitter: @JDPower

No advertising or other promotional use can be made of the information in this release without the express prior written consent of JD Power. www.jdpower.com/corporate