Category: Wealth ManagementCanada

Canadian Full Service Investor Satisfaction Declines, While U.S. Full Service Investor Satisfaction Rises

1970-01-01

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TORONTO: 23 August 2012 — Canadian full service investor satisfaction declines for the second consecutive year as investor relationships with advisors weakens, according to the JD Power and Associates 2012 Canadian Full Service Investor Satisfaction Study^SM released today.

Amid global economic uncertainty, overall investor satisfaction with full service investment firms in Canada averages 720 (on a 1,000-point scale), declining 13 points from 2011. In contrast, satisfaction among U.S. full service investors has risen for two consecutive years to 775 in 2012¹,  widening the satisfaction gap between full service investors in Canada and the United States to 55 points from 39 points in 2011.

“The difference between U.S. and Canada full service investors is due to the relationship with their investment firm,” said Lubo Li, senior director of the financial services practice at JD Power and Associates, Toronto. “Investors in Canada are less satisfied with their firm, in large part, because their advisor is not keeping them up to date with market trends as much as during the past two years and isn’t demonstrating as much concern for their needs.”

Investors in Canada rate their advisor 7.8 (on a 10-point scale), on average, for showing concern for their needs, compared with investors in the United States, who rate their advisor 8.44. Additionally, investors in Canada rate their advisor 7.43, on average, for promptness in keeping them up to date with market trends, compared with 8.1 among investors in the United States.

“Certainly, external factors such as global financial market fluctuations play a role in overall satisfaction, but also present an opportunity for advisors to deepen the relationship with their investors by managing expectations and providing timely advice to navigate the tenuous market,” said Li.

“During uncertain economic times, when the market fluctuates, investors more than ever need the advice provided by their investment advisor,” said Li. “Investors need reassurance regarding the current risk exposure of their portfolio and to believe they are well positioned when the market comes back.”
 
An investor’s experience is closely linked to the bottom line of their firm, as that experience impacts loyalty, advocacy and share of wallet. While 77 per cent of investors who are highly satisfied (scores of 900 or greater) say they “definitely will” recommend their primary firm, only four per cent of investors who have low satisfaction (scores below 700) say the same. Additionally, 27 per cent of investors with high satisfaction say they will increase the amount invested with their primary firm in the next 12 months, compared with only 14 per cent of investors with low satisfaction.
    
“Improving the investor experience starts at the home office.  Firms that support their advisors with user-friendly tools, state-of-the-art technology and training and education on their usage put their advisors in the best position to succeed,” said Li.  
Key best practices identified in the Canadian Full Service Investor Satisfaction Study that enable advisors to provide more valuable services and build more effective investor relationships include:

• Build and/or enhance tools and financial planning systems that are integrated, which maximizes the amount of time advisors may spend with investors and minimizes the amount of time they spend on administrative tasks.  
• Provide ongoing training and education that demonstrates how internal tools and resources can most effectively be used to enhance day-to-day interactions with investors.
• Provide benchmark comparisons online and in account statements that facilitate advisor-investor discussions regarding investment performance.
• Closely look at advisor-to-investor ratios. A higher number of investors likely means higher production, but also may have a long-term detrimental effect on the individual investor experience. 

Now in its seventh year, the Canadian Full Services Investor Satisfaction Study provides benchmarks for investor satisfaction that allow individual investment institutions in Canada to evaluate how they compare 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; investment performance; account information; account offerings; commissions and fees; website; and problem resolution.

Raymond James Ltd. ranks highest in investor satisfaction among full service investment firms in Canada with a score of 745. Raymond James Ltd. performs particularly well in three of the seven factors: investment advisor; investment performance; and account information. Following in the rankings are Edward Jones (735) and TD Waterhouse Private Investment Advice (731).

The 2012 Canadian Full Service Investor Satisfaction Study is based on responses from more than 5,200 investors who use advice-based investment services with financial institutions in Canada. The study was fielded in June and July 2012.

¹ Source: JD Power and Associates 2012 U.S. Full Service Investor Satisfaction Study^SM

About JD Power and Associates

Headquartered in Westlake Village, Calif., JD Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction.  The company’s quality and satisfaction measurements are based on responses from millions of consumers annually.  For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. JD Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

McGraw-Hill announced on September 12, 2011, its intention to separate into two companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial’s leading brands include Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts energy information services and JD Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.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 and Associates; 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 and Associates. www.jdpower.com/corporate

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Despite Improvements, Canadian Discount Brokerage Firms Still Trail Their United States Counterpart in Investor Satisfaction

1970-01-01

jdp-root

TORONTO: 20 September 2012 — Although overall investor satisfaction with Canadian discount brokerage firms increases year over year, closing the satisfaction gap with U.S. firms, large gaps in the investor experience remain, according to the JD Power and Associates 2012 Canadian Discount Brokerage Investor Satisfaction Study^SM released today.

Overall investor satisfaction with discount brokerage firms in Canada averages 700 (on a 1,000-point scale), an increase of 21 points from 679 in 2011. In comparison, investor satisfaction in the United States averages 768, according to the JD Power and Associates 2012 U.S. Self-Directed Investor Satisfaction Study.SM  Further, satisfaction in the Canadian discount brokerage industry trails satisfaction in the Canadian full service brokerage industry by 20 points and in the retail banking industry by 53 points.

The study finds that the largest gaps in satisfaction between brokerage firms in Canada and the United States are with problem resolution (568 vs. 648, respectively); trading charges and fees (622 vs. 697, respectively); and interaction (752 vs. 817, respectively). Among the best service practices that drive satisfaction with discount brokerage firms, Canada significantly trails the United States in contacting investors regarding products, services and seminars; website accessibility; and the usage of asset allocation and financial planning tools.  

“In the discount brokerage business, high-performing firms provide tools and resources that assist their investors in making better investment decisions at a fair and transparent price,” said Lubo Li, senior director and financial services practice leader at JD Power and Associates in Canada. “In the United States, competition has driven trade commissions much lower, forcing high-performing firms to compete in the value they provide their investors¬ in terms of tools and resources. At this point, the Canadian investor experience falls short, compared with what U.S.-based investors are getting.”

The perceived gap in value has a long-lasting effect as well. Only 19 per cent of Canadian investors say they “strongly agree” that they feel loyal to their primary investment firm, compared with 28 per cent of U.S. investors. Additionally, 23 per cent of Canadian investors say they “definitely will” recommend their primary investment firm, compared with 36 per cent of U.S. investors.

“All major Canadian banks have a discount brokerage to service their investors’ diverse needs in one location. Failure to deliver services that their investors have come to expect, based on their banking and advisory services, may lead to an inconsistent experience, detract from the value of the corporate brand¬ and, worst of all, result in higher levels of attrition and loss of assets under management,” said Li.

The study, now in its fourth 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.

Disnat ranks highest in discount brokerage investor satisfaction for a fourth consecutive year with a score of 768, and ranks among the highest-performing firms in all factors. Following in the rankings are BMO InvestorLine (720) and National Bank Direct Brokerage (719).

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

• Consider the full range of services beyond the per-trade commission. In typical transactions, a $5-$10 difference in commission is a very small percentage of the overall value of the trade. The value provided beyond the cost in terms of offerings, tools and resources may be much more compelling.
• While more convenient to invest with the same financial institution as your primary bank, exploring the offerings from other, sometimes smaller investment firms may be worthwhile. Although they do not have as robust a branch network as the larger financial institutions, smaller discount brokerage firms often have a positive image among their investors.
• Read the fine print regarding the fees you will be assessed. Often times, fees vary by the size of your account, as well as the frequency of your transactions.

The 2012 Canadian Discount Brokerage Investor Satisfaction Study includes responses from nearly 2,900 investors who use investment services with discount brokerage firms in Canada. The study was fielded from June 2012 through July 2012.

About JD Power and Associates

Headquartered in Westlake Village, Calif., JD Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction.  The company’s quality and satisfaction measurements are based on responses from millions of consumers annually.  For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. JD Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

McGraw-Hill announced on September 12, 2011, its intention to separate into two companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial’s leading brands include Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts energy information services and JD Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.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 and Associates; 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 and Associates. www.jdpower.com/corporate

 

2013-08-22

jdp-root

TORONTO: 22 August 2013 — Improved market performance, coupled with effective advisor communication with their clients, help drive an increase in overall investor satisfaction with full service investment firms in Canada, according to the JD Power 2013 Canadian Full Service Investor Satisfaction Study^SM released today.

The Canadian Full Service Investor Satisfaction Study provides benchmarks for 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 (38%); investment performance (18%); account information (17%); account offerings (14%); commissions and fees (8%); website (2%); and problem resolution (2%).

Key Findings

• Overall investor satisfaction with full service investment firms in Canada improves to 737, up 17 points from 2012.
• Satisfaction improves an average of 99 points when advisors discuss fees with their investors.
• Nearly three-fourths (72%) of highly satisfied investors indicate they will recommend their investment firm to others.

Overall satisfaction improves to 737 (on a 1,000-point scale), up from 720 in 2012. The study finds a strong correlation between investor satisfaction and actual market performance, with only 8 percent of investors indicating a decrease in their portfolio performance in 2013, down from 29 percent in 2012.

“Investment performance certainly helps drive an increase in overall satisfaction, but the advisor still plays a key role,” said Craig Martin, director of investment services at JD Power. “Even when the market is strong, advisors need to ensure their clients understand the reasons for their portfolio performance, explain costs and fees and manage expectations regarding risk. Relying too heavily on financial performance alone to drive investor satisfaction may have a number of pitfalls.”

According to the study, investors are not only looking for good financial return, they are also are seeking reassurance that they are making the right investment decisions. Overall satisfaction among investors who indicate their advisor clearly communicated reasons for investment performance is 145 points higher than among those who indicate the converse. Additionally, when advisors discuss and effectively incorporate risk tolerance as part of their reviews with investors, there is a significant 109-point lift in overall satisfaction. Investors want more than just strong investment performance; they want to understand the reasons behind this performance.

Firms with higher satisfaction scores ensure that investors feel involved in—and to an extent responsible for—their investment performance. Stronger relationships between advisors and investors allow these firms to positively influence investor perceptions of success.

Communicating Costs and Fees Is Key to Satisfaction

Clear communication regarding the reasons for investment performance and an explanation of the firm’s cost and fee structure are among the most important facets in overall investor satisfaction. Despite an overall increase in satisfaction with investment firms, the study finds that fewer advisors are talking to their investors about fees—57 percent of investors indicate that their advisor explained their fee structure, down from 63 percent in 2012. Investor satisfaction improves an average of 99 points when advisors discuss their firm’s fee structure.

“Taking the time to explain the fees that firms charge helps ensure investors fully understand the value proposition of working with an advisor—they see what costs are associated with the relationship and the benefits they are getting for the fees that are charged,” said Martin. “Being transparent about fees is an essential part of a healthy relationship and is something that all advisors should be talking about with their investors.”

An investor’s experience is closely linked to the bottom line of their firm, as that experience impacts loyalty, advocacy and share of wallet. While 72 percent of highly satisfied investors (satisfaction scores of 900 and above) say they “definitely will” recommend their firm to others, only 29 percent of investors with medium satisfaction (scores between 700 and 899) and 4 percent of investors who have low satisfaction (scores below 700) say the same. Additionally, 27 percent of highly satisfied investors say they will increase the amount invested with their primary firm during the next 12 months, compared with only 17 percent of investors with low satisfaction.

“Word of mouth recommendations are essential in the investment industry, as that is the means by which advisors acquire the majority of their investors,” said Lubo Li, senior director of the financial services practice at JD Power, Toronto. “Satisfied investors not only are more likely to recommend their investment firm or advisor to family and friends, but are also more likely to increase their investments with their firm. Firms that deliver the best experience are likely to reap the financial benefits of increased investor retention and improve their chances at attracting new investors.”

Drive Higher Perceptions of Performance

A high level of communication alone is not enough to improve investor satisfaction. Advisors who achieve above-average investment performance satisfaction and who have a strong relationship with their investors share the following traits:

• They develop and/or review a financial plan that effectively incorporates risk and ensure this plan is in a tangible form that can be easily understood by the investor.
• They clearly communicate the reasons for investment performance and the firm’s fee structure so investors fully understand the value provided for the fees paid.
• They strive for an equal partnership with investors and make them feel involved in decisions impacting the performance of their investments.
• They define the appropriate level and method of contact to meet the expectations of their investors.

Investment Firm Rankings

Edward Jones ranks highest in investor satisfaction among full service investment firms in Canada, with a score of 773. Edward Jones performs particularly well in four factors: investment advisor; investment performance; account information; and account offerings. Following in the rankings are DundeeWealth (760) and Raymond James Ltd. (758).

The 2013 Canadian Full Service Investor Satisfaction Study is based on responses from 5,592 investors who use advice-based investment services with financial institutions in Canada. The study was fielded in May and 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 & Poor’s 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

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