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Category: Wealth ManagementCanada|United States

  • 2023 Canada Full-Service Investor Satisfaction Study

    Satisfaction with Full-Service Financial Advisors in Canada Plummets as Markets Fall, JD Power Finds

    2023-05-02

    TORONTO: 2 May 2023 — High interest rates, inflationary pressure and volatile capital markets that saw U.S. economic indices and Canada’s S&P/TSX post negative returns (8.7% for the TSX) in 2022 have wreaked havoc on investors’ returns. That abysmal performance led to a significant drop in overall investor satisfaction with their financial advisor relationships, according to the JD Power 2023 Canada Full-Service Investor Satisfaction Study,SM released today. The study finds that satisfaction with investors’ wealth management professionals is 652 (on a 1,000-point scale), down 17 points from a year ago.

    “Advisors don’t control the ups and downs of the market but too often clients give them credit and blame for investment returns,” said Craig Martin, executive managing director and global head of wealth & lending intelligence at JD Power. “This misguided view of the advisor’s role and value is a key risk for full-service firms in the future. If the main value provided is investment performance, investors may increasingly look for less costly ways to achieve similar returns. That said, some advisors and firms have recognized that delivering a differentiated experience pays off. Instead of providing a transactional-style service, which puts advisors at risk of client churn, JD Power sees leaders focusing on delivering value through comprehensive advice that shines through the market’s ebb and flow and helps clients achieve their life goals. This level of advisory insulates these firms and advisors from the elevated risks of negative markets and creates evangelists in the good times.”

    The following are key findings of the 2023 study:

    • Only a fraction of investors receives comprehensive advice: The study shows that only 6% of investors in Canada are receiving a comprehensive level of service and advice from their wealth management professionals. Comprehensive advice is defined as personalized guidance from an advisor that addresses all financial and wealth management needs; demonstrates an intimate understanding of the client’s lifestyle and goals; puts the client’s best interests first; includes a financial plan; ensures clients understand the fees they pay; and is an integral part of the client’s life.
    •  Comprehensive advice promotes advocacy: Investors who receive comprehensive advice from their financial advisors are more than three times as likely as those who receive transactional advice to recommend their financial advisor to friends or family.
    • Just more than half of full-service wealth clients have financial plans: Only 57% of full-service wealth management clients say they have a financial plan and, within that group, 43% do not agree that their advisor’s recommendations are in their best interests. Surprisingly, 38% of investors who say they have a plan don’t think their advisor understands their financial goals and needs.
    • Younger clients already voting with their feet:  Millennials1 are the most likely to switch firms in the next 12 months and are most likely to already be working with a secondary investment firm. One in five (20%) Millennials say they “definitely will” or “probably will” switch firms, and 33% say they are working with a secondary investment firm.

    Study Ranking

    Edward Jones ranks highest in overall investor satisfaction with a score of 699. Raymond James (697) ranks second and National Bank Financial (677) ranks third.

    The Canada Full-Service Investor Satisfaction Study, now in its 18th year, measures overall investor satisfaction with full-service investment firms in seven factors (in order of importance): trust; people; products and services; value for fees; ability to manage wealth how and when I want; problem resolution; and digital channels.

    The study is based on responses from 4,803 investors who work directly with a dedicated financial advisor or team of advisors. The study was fielded from October 2022 through January 2023.

    For more information about the Canada Full-Service 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 behavior, 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

    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.

     

  • 2020 Canada Full-Service Investor Satisfaction Study

    Brand Trust Critical for Full-Service Investment Firms in Canada to Retain Investors, JD Power Finds

    2020-04-22

    TORONTO: 16 April 2020 — Satisfaction with full-service investment firms in Canada improves significantly from 2019, increasing to 790 (on a 1,000-point scale) from 778 year over year, according to the JD Power 2020 Canada Full-Service Investor Satisfaction Study,SM released today. However, the recent havoc in capital markets and economic uncertainty due to the COVID-19 pandemic may cause some wealth management firms to struggle to retain disgruntled clients, while those firms with higher brand trust will weather the storm.

    The JD Power study finds that 70% of investors in Canada who highly trust their investment firm say they definitely will remain with their current provider, even when their portfolio performance does not meet expectations. By contrast, when brand trust is weak, only 16 percent of investors say they definitely will stay loyal to their current provider when investment performance lags expectations.

    “Brand trust is not something that is built overnight and wealth management firms with strong brand equity are better positioned to avert client attrition during periods of market volatility, economic uncertainty or when things go sour,” says Mike Foy, senior director of wealth intelligence at JD Power. “It is never too late to start building and cultivating trust through frequent client communications, responsiveness, or owning and resolving issues, as well as providing useful guidance and assurance during especially challenging times like these.”

    Following are some of the key findings of the 2020 study:

    • Digital contact more important than ever: There is a direct correlation between advisor use of digital channels to communicate with clients and increased investment. In routine communications—and especially during the realities of self-isolation—advisors who enhance their client interactions using digital channels (video conferencing, text, email and online chats) are 35% more likely to realize increased investment from clients than when no digital contact is used. Also, increased investment is likely to occur when digital planning tools are being used.
       
    • Millennials more likely than Boomers to jump ship—but are better promoters: Millennial1 investors are more than five times more inclined to switch their primary wealth management provider compared with Boomer investors (31% vs. 6%, respectively). Yet, Millennials are better brand ambassadors as they are much more receptive to being asked to provide referrals and will act on such requests. More than one-third (36%) of Millennials will make a referral if asked by their advisor, compared to only 17% of Boomers.
       
    • Wealth transfer a missed opportunity: More than two-thirds (68%) of Boomer investors have a designated next-generation beneficiary, yet only 31% were asked by their financial advisor about the beneficiary’s investment needs. Furthermore, 49% of Boomer investors without a next-generation beneficiary say they are willing to talk about beneficiary investment needs. These findings should serve as a wakeup call to firms that are missing key chances to help current clients address a key financial need, as well as to grow and retain a pool of next-generation investors and assets over the long term.

    Study Rankings

    Edward Jones ranks highest in overall investor satisfaction for an eighth consecutive year with a score of 836. Assante (829) ranks second and Raymond James (813) ranks third.

    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; account information; firm interaction; product offerings; information resources; investment performance; commission and fees; and problem resolution.

    The 2020 study is based on responses from 4,328 investors in Canada who make some or all of their investment decisions with a financial advisor regarding their primary investment account. It was fielded from November 2019 through January 2020.

    For more information about the 2020 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, Asia Pacific and Europe.

    Media Relations Contacts
    Gal Wilder, Cohn & Wolfe; 647-259-3261; [email protected]
    Madelyn Boelhouwer, Cohn & Wolfe; 647-259-    3283; [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 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.