Category: Wealth ManagementUnited States

High Net Worth Customers Underwhelmed by Wealth Management Mobile Apps, JD Power Finds

2019-03-06

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For more information about the JD Power U.S. Wealth Management Mobile App Satisfaction Study, visit https://www.jdpower.com/business/resource/us-wealth-mobile-app-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
Geno Effler, JD Power; Costa Mesa, Calif.; 714-621-6224; [email protected]
John Roderick; St. James, N.Y.; 631-584-2200; [email protected]

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

 

Millennials are Better Prepared for Retirement than Their Parents, JD Power Finds

2018-05-23

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COSTA MESA, Calif.: 24 May 2018 — “Best prepared for retirement.” That’s not a superlative one might expect to describe Millennials,^[1] but according to the JD Power 2018 Group Retirement Satisfaction Study,^SM released today, it’s true. Millennials are most likely of all demographic groups to have set specific retirement goals and have the highest amount of savings—relative to age—in group retirement plans.

The inaugural study evaluates participant satisfaction with providers of group retirement plans, such as 401(k)s, based on six factors: interaction across live and digital channels; investment and service offerings; fees and expenses; plan features; information resources; and communications. Plan providers are ranked in three categories based on their overall mix of business in terms of average plan size.

“The fact that many in the youngest generation of plan participants are actively preparing for retirement now sends a clear message to providers,” said Mike Foy, Senior Director of the Wealth Management Practice at JD Power. “They need to be focused on upping their game on their digital and mobile offerings to meet the expectations of this digitally engaged customer segment, not only to help differentiate themselves with plan sponsors who make provider selection decisions on behalf of the employees, but to position themselves to benefit from rollover events when employees eventually leave their jobs. With roughly $5.3 trillion in wealth currently sitting in 401(k) plans, getting the group plan participant satisfaction formula right now is crucial for the future of the wealth management industry.”

Following are some key findings of the 2018 study:

• Yes, Millennials are most prepared for retirement: Among all generations of group retirement plan members, 51% of Millennials have set specific retirement goals, compared with just 44% among both Gen X and Boomer participants. Of the 51% of Millennials who have set goals, 83% say they believe they are on track to meet them.

• Boomers missing the mark: Nearly two-thirds (61%) of Millennials have at least $25,000 in total retirement savings, and 27% of them have more than $100,000, with an average of 30-35 years before retirement. By contrast, 75% of Boomers have more than $100,000 in savings with an average of just three years until retirement age. The average Boomer will hit age 65 with just 3.4 years of current income saved, far short of the 10 years some experts recommend.

• Just one-fifth of 401(k) participants plan to roll over to current plan providers: While there is an enormous “money in motion” opportunity looming, just 20% of current group plan participants say they “definitely will” roll over those assets to their current plan provider in the future. However, when plan participants are digitally engaged, aware of guidance and education resources, and experience transparency around fees, the likelihood that they will roll over their assets to their group plan provider increases to 48%.

Study Rankings

Charles Schwab ranks highest in group retirement plan satisfaction in the large plan segment (824). Nationwide ranks highest in the mixed plan segment (770) and PNC Retirement Solutions ranks highest in the small plan segment (806).

The 2018 study is based on responses from more than 9,500 group retirement plan members. The study was fielded in February-March 2018.

For more information about the 2018 Group Retirement Plan Satisfaction Study, visit http://www.jdpower.com/business/resource/us-group-retirement-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
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]
John Roderick; St. James, N.Y.; 631-584-2200; [email protected]

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

 

Self-Directed Investors Crave More Personalized Guidance, Proactive Contact from Investment Firms, JD Power Finds

2018-04-25

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COSTA MESA, Calif.: 26 April 2018 — A significant number of self-directed investors seeking guidance from their firm are getting neither the frequency nor the quality of proactive contact they want. According to the JD Power 2018 U.S. Self-Directed Investor Satisfaction Study,^SM released today, proactive, client-centric contact from an advisor is the key driver of customer satisfaction among self-directed investors.

“As traditional full-service financial advisor businesses have increasingly set their sights on the high-net-worth investor, many firms are deploying centralized advisor call centers to serve the needs of mass affluent investors who are looking for professional guidance,” said Mike Foy, Senior Director of the Wealth Management Practice at JD Power. “But this is often limited to infrequent, reactive communication that fails to address an investor’s personal needs and goals. While firms cannot expect to deliver the level of personalized attention investors would receive from a higher-cost dedicated financial advisor, they can close the gap between the two, in part by effectively using technology to empower more frequent and meaningful human interaction.”

Following are key findings of the 2018 study:

• Proactive, client-centric contact drives satisfaction: Among investors who seek guidance from their brokerage firms, overall satisfaction is 758 (on a 1,000-point scale) when investors receive no contact from an advisor. That number jumps to 810 when investors receive only reactive contact, and to 850 when an advisor makes at least one proactive outreach to the investor. Additionally, satisfaction among investors who had only investment-centric discussions (e.g., performance, asset allocation and market trends) with an advisor is 799, compared with 878 among those whose discussions included multiple client-centric topics (i.e., personal needs, goals and life changes).

• Reduced trading fees drive advocacy: With the benchmark for low-cost trading fees reaching a historic low, 24% of investors seeking guidance indicate being aware of a decrease in their trading fees and 34% say they are now paying below $5 per trade. Satisfaction is significantly higher among investors who have recognized a reduction in trading fees than among those who have not recognized such a reduction. Reduced fees also have a notable effect on advocacy. Seeking guidance investors identifying as NPS Promoters^[1] who experience reduced fees have NPS scores of 65 vs. just 43 for those who do not experience a reduction in trading fees. 

• Mobile grows but struggles to impress: Mobile usage has grown considerably, especially amongst Millennials^[2], with 70% of all self-directed investors indicating the use of mobile for investment activity. When it comes to interacting with investment firms, however, the mobile channel earns significantly lower marks for customer satisfaction than phone and web. Mobile satisfaction is 51 points lower than online satisfaction among DIY investors and 45 points lower among advice-seeking investors.

Study Rankings

For the first time since the study launched 16 years ago, theU.S. Self-Directed Investor Satisfaction Study independently evaluates key satisfaction drivers and firm performance for those seeking guidance (i.e., investors who don’t have a dedicated financial advisor but do have access to interact with a registered investment professional) and true DIY investors (those who do not interact with professional advisors).

Vanguard ranks highest in self-directed investor satisfaction among both those seeking guidance (830) and DIY investors (802).

The U.S. Self-Directed Investor Satisfaction Study measures self-directed investors’ satisfaction with their investment firm based on performance in several factors. The seeking guidance segment has eight factors (in order of importance): firm interaction; account information; investment performance; information resources; financial advisor; commissions and fees; product offerings; and problem resolution. The DIY segment has seven factors (in order of importance): interaction; account information; commissions and fees; product offerings; information resources; investment performance; and problem resolution. 

The 2018 study is based on responses from 5,504 investors who make all their investment decisions without the counsel of a personal financial advisor. The study was fielded in December 2017.

For more information about the 2018 U.S. Self-Directed Investor Satisfaction Study, visit http://www.jdpower.com/business/resource/us-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
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]
John Roderick; St. James, N.Y.; 631-584-2200; [email protected]

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

 

Millennial Investor Loyalty Hinges on Advisor Relationship, Not Technology, JD Power Finds

2018-03-28

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COSTA MESA, Calif.: 29 March 2018 — Millennials, the generation poised to inherit a significant portion of the estimated $30 trillion great wealth transfer, are the least loyal group of full-service investors. According to the JD Power 2018 U.S. Full Service Investor Satisfaction Study,^SM the key to full-service firms not only attracting but retaining Millennial¹ wealth is not new technology or mobile offerings, but cultivating great relationships and human, goals-based advice.

“The financial services industry has been fixated on the idea that cracking the code on Millennial investors means huge investments in digital and mobile,” said Mike Foy, Senior Director of the Wealth Management Practice at JD Power. “While our research confirms that a compelling digital experience will help inform investment firm selection and even increase satisfaction scores, real loyalty among Millennials is much more heavily influenced by frequent communication with an advisor in the context of a goals-based strategy.”

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

• Millennial attrition risk four times higher than other generations: Among investors who are the most highly satisfied (overall satisfaction scores of 850 or higher on a 1,000-point scale), 29% of Millennials say they will consider leaving their current full-service advisory firm within the next 12 months, compared with just 4% of investors in older generations.

• Tech may draw them in, but advisor relationships keep them: While great digital experiences are important for attracting Millennial investors, technology alone will not keep them engaged. Millennials are most likely to indicate their intent to switch firms (44%) when they are using self-service mobile tools and advisor communication fails to meet their expectation. By contrast, when advisors deliver frequent, effective communication and show progress toward goals, Millennial likelihood of switching drops to just 17%.

• Emerging affluent Millennials want more advisor contact: Among the emerging affluent (i.e., Millennials with more than $100,000 in investable assets), 31% say they would like to have more contact with their financial advisors, compared with just 7% of older investors. Emerging affluents already average 4.5 advisor contacts per year vs. 3.6 contacts per year among other generational groups, so it’s not that they are being ignored by advisors as much as they actually have a greater demand for interaction. A possible explanation is that older investors already feel they are on track and have established trust over time with their financial advisor.

• Text me the prospectus: Investors are responding positively to advisor communication via emerging channels, such as social media, texting and video, though these channels still show limited usage (10%, 7% and 5%, respectively). Investors who do receive communication through one or more of those channels are more satisfied with their investment firm, led by Millennials, among whom overall satisfaction is 58 points higher when their advisors use digital channels to communicate. Firms and advisors seeking to sustain or increase their contact frequency to meet increasing investor demands will need to incorporate digital channels into the mix, obviously in a way that reflects the unique preferences of individual clients.  

Study Rankings

Charles Schwab & Co., Inc. (867) ranks highest in overall investor satisfaction for a third consecutive year, followed by Edward Jones (866) and Stifel, Nicolaus & Company (865). The industry average score is 839.

The U.S. Full Service Investor Satisfaction Study, now in its 16th year, measures overall investor satisfaction with full-service investment firms in eight factors (in order of importance): financial advisor; account information; investment performance; firm interaction; product offerings; commissions and fees; information resources; and problem resolution.

The study was fielded in December 2017 and is based on responses from 4,419 investors who make some or all of their investment decisions with a financial advisor.

For more information about the U.S. Full Service Investor Satisfaction Study, visit http://www.jdpower.com/business/resource/us-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
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]
John Roderick; St. James, N.Y.; 631-584-2200; [email protected]

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

 

Cheaper Trades May Attract New Customers to Self-Directed Brokerages, But Keeping Them Will Require More Than Just Low Fees

2017-05-17

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COSTA MESA, Calif.: 18 May 2017 — The latest round of trading fee cuts announced in recent months by self-directed investment firms may help drive new customer acquisition in the short term but it won’t be enough to keep clients loyal over time.  According to the JD Power 2017 U.S. Self-Directed Investor Study,^SM released today, a firm’s reputation and low trading fees are the two most critical drivers of initial firm selection among self-directed investors, but firms need to deliver value or clients will defect to lower, or in some cases no-cost, options elsewhere.

“A confluence of factors including changes to technology, industry regulation, investor preferences and the competitive landscape is disrupting the industry and has created the conditions for a ‘money in motion’ event for self-directed investment providers,” said Mike Foy, senior director of the wealth management practice at JD Power. “As transaction fees continue to approach zero, it’s more critical than ever that firms differentiate by delivering a superior client experience, and that starts with successful onboarding.” 

Following are the key findings of the 2017 study:

• Onboarding as a “moment of truth”:  The critical elements of an effective onboarding experience include providing transparency around fees, educating clients on how to use available resources including digital and mobile channels, and delivering help with setting personal goals.  When firms deliver on these key experiences, new clients are significantly more satisfied than when they do not (822 vs. 773).   

• Affluent Millennials represent largest opportunity and risk: Nearly one-fourth (24%) of self-directed Affluent Millennials¹ ($100,000 or more in investable assets) say they either “probably will” or “definitely will” leave their current firm in the next 12 months vs. just 10% of non-Millennials. The Affluent Millennial segment controls 68% of all “at-risk” assets among surveyed investors.

• Share of mobile trading volume up 152% in past seven years: Overall use of mobile among self-directed investors has nearly doubled during the past seven years and among mobile traders, 63% of trades were conducted via mobile, up from just 25% in 2011.

• Banks show growth potential in self-directed investor space: Citigroup is included in the rankings in 2017 for the first time in this study, further increasing the representation of banks in the self-service investment marketplace. Despite lower overall satisfaction scores, banks are poised for growth in this space, especially with Millennials, who indicate a greater openness to consolidate financial products and services with a single institution.

Study Rankings

Vanguard ranks highest in self-directed investor satisfaction with a score of 813 (on a 1,000-point scale). E*TRADE Financial ranks second with a score of 809, followed by TD Ameritrade at 804.

The U.S. Self-Directed Investor Satisfaction Study, now in its 16th year, measures self-directed investors’ satisfaction with their investment firm based on performance in six factors (in order of importance): interaction; account information; trading charges and fees; product offerings; information resources; and problem resolution. Overall satisfaction in 2017 averages 779, up 4 points from 2016.

The 2017 study is based on responses from more than 4,600 investors who make all of their investment decisions without the counsel of a personal investment advisor. The study was fielded in January 2017.

For more information about the JD Power U.S. Self-Directed Investor Study^SM visit

http://www.jdpower.com/resource/us-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.

Media Relations Contacts

Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]

John Roderick; St. James, N.Y.; 631-584-2200; [email protected]

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

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¹ JD Power defines the generations as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); Gen Z (1995-2004). Millennials are defined as those born between 1982-1994.

 

JD Power Finds Risks, Opportunities for Financial Advisors in Emerging Affluent Category

2017-04-05

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Costa Mesa, Calif.: 6 April 2017 — Emerging affluent investors—defined as Millennials¹ with $100,000 in investable assets—currently control the largest portion of at-risk assets managed by full service financial advisors, according to the JD Power 2017 U.S. Full Service Investor Satisfaction Study,^SM released today. Surprisingly, half (48%) of emerging affluent investors currently working with an advisor say they “probably will” or “definitely will” leave their current firm, compared with just 8% among all other generations of investors.

 “Wealth managers have been slow to focus on Millennials because they don’t yet have the assets Boomers do, but when looking at potential money in motion—even in the short term—the picture looks quite different,” said Mike Foy, director of the wealth management practice at JD Power. “With the emergence of robo-advisors and self-directed platforms, investors have more options than ever, both within and outside the traditional full-service channel.”

The study captures the clearest evidence to date of a historic generational shift that is currently unfolding in the wealth management space. Noting distinct differences between Millennials and other generational groups on indicators such as overall satisfaction, economic outlook, advisor and firm loyalty, and advocacy/referrals, this year’s study suggests that advisory firms will need to tailor their offerings to the unique needs of this growing customer base.

Following are some of the key generational findings in the study:

• Millennial money in motion: An alarming 48% of emerging affluent Millennials indicate they will definitely or probably leave their current provider in the next 12 months versus only 8% of other investors. While emerging affluent Millennials still represent just 8% of the overall available investable asset pool, they represent 55% of assets held by investors who are currently at risk of leaving their current investment firm.
• Evolving investor needs: Today, just 54% of full service investors have a documented financial plan and while those plans generally address retirement planning, these investors are much less likely to feel they are addressing other financial goals that are a higher priority for Millennials (e.g., major purchase or education planning) or for Boomers who are leaving the work force (e.g., capital preservation or estate planning).
• Brave new world of referrals: The firms that are able to create loyalty among Millennial clients today can expect significant ongoing rewards. Among those clients identified as highly likely to recommend, Millennials made more positive recommendations during the past 12 months (an average of 8.1 per client) than did Boomers (3.3 per client) and Gen X (3.7 per client) combined. But advisors and firms need to actively cultivate this referral source: Millennials indicated they would be more likely to provide referrals if their advisor asked (40%) or they were incentivized to do so (39%).
• Risk of channel defection: One-fourth (25%) of full-service Millennial investors have either tried, or are actively using, a robo-advisor platform and 28% of them rate their satisfaction with this platform higher than for their full-service firm. Also, more than one-third (34%) have a secondary self-directed account, suggesting a flexibility and openness to a variety of service models not exhibited by investors in other generational groups. 

Study Rankings

Charles Schwab & Co., Inc. (838) ranks highest in overall investor satisfaction for a second consecutive year, followed by Fidelity Investments (835) and Edward Jones (833).

The U.S. Full Service Investor Satisfaction Study, now in its 15th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): financial advisor; investment performance; account information; product offerings; commissions and fees; website; and problem resolution. This year, overall investor satisfaction is up 15 points to 819 (on a 1,000-point scale) from 2016.

The study was fielded in January 2017 and is based on responses from more than 6,500 investors who make some or all of their investment decisions with a financial advisor.

For more information about the 2017 U.S. Full Service Investor Satisfaction Study, visit http://www.jdpower.com/resource/us-full-service-investor-satisfaction-study.

See the online press release at http://www.jdpower.com/pr-id/2017037.

JD Power is a global leader in consumer insights, advisory services and data and analytics. Those 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.

Media Relations Contacts
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]

John Roderick; East Coast; 631-584-2200; [email protected]

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

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¹JD Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946 to 1964); Gen X (1965-1976); and Gen Y (1977 to 1994). Xennials (1978-1983) and Millennials (1982-1994) are subsets of Gen Y.

 

 

Self-Directed Investors Seek More Guidance from Investment Firms, Says JD Power Study

2016-05-05

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CHICAGO: 19 May 2016 — Self-directed investors are increasingly looking for their investment firm to provide advice and guidance, according to the JD Power 2016 U.S. Self-Directed Investor Study,^SM released today.

Only 61% of self-directed investors in 2016 follow the traditional self-serve, or do-it-yourself (DIY), approach to managing their investments, down from 66% in 2015. At the same time, a subset of self-directed investors called “validators”—those who want to make their own decisions but still have access to an advisor for support and as a sounding board—jumps to 25% in 2016 from 21% in 2015, while another subset called “collaborators”—those who interact with an advisor and depend on that guidance and advice for investment decisions—increases to 14% from 13%.

The growth in validators mirrors a similar trend among full service investors, of which an increasing number are using dedicated advisors as sounding boards but not as final decision-makers. The growing number of investors seeking a middle ground between the traditional full service and self-directed models is forcing investment firms to develop a hybrid service model that seamlessly combines human interaction and technology.

“The convergence of self-directed and full service models produces both significant opportunities and threats to established firms in this space,” said Mike Foy, director of the wealth management practice at JD Power. “A perfect storm of new technology, such as robo-advisors; new regulations, such as the Department of Labor’s (DOL) Fiduciary Standard; and demographic changes, such as the rise of the Millennial generation, is dramatically changing the value proposition traditional firms provide.”    

Following are additional findings of the 2016 study:

• Investors Crave Hybrid Investment Advisory Model: Self-directed investors are increasingly seeking a hybrid service model that provides a combination of control and guidance. This is evident in the 25% of self-directed investors who indicate they want access to an advisor as a sounding board, and the performance of Scottrade, which has the highest overall customer satisfaction in 2016, following a strategic change in its business model to offer more investment advice to its clients. 

• Millennials Help Fuel Rise of the Robots: Nearly half (47%) of investors are interested in robo-advice when their firm offers it. Interest varies widely by demographic group (72% of Millennials—those born 1982-1994—and just 25% of Pre-Boomers—those born prior to 1946). Among investors not interested, top reasons include a preference to manage their own investments; desire for personal interaction; lack of trust; and personal potential for bias.

• Fiduciary Standard Rule Creates Opportunity for Investment Firms: The DOL rule presents an opportunity for self-directed firms to capture share from full service firms, with 46% of full service Millennials and 33% of Boomers (those born 1946-1964) who are dissatisfied with fees express a willingness to switch to self-directed accounts.

• Onboarding Process Critical “Moment of Truth”: Delivering on key aspects of the onboarding experience is especially critical, as the percentage of at-risk clients—those indicating they either “probably will” or “definitely will” leave the firm within 12 months—drops from 19% for clients with tenure of three years or less to just 9% among those with four-to-10 years and 3% for those with 11 or more years. Helping clients set goals and understand fees and providing effective support to quickly get them up to speed on trading platforms and mobile are critical during onboarding.

• Mobile Usage Drives Satisfaction and Increased Trading: While the percentage of investors using mobile has increased just 4 percentage points during the past four years (18% in 2016 vs. 14% in 2013), both satisfaction and trade activity among these users has increased significantly. Mobile users make an average of 23.2 trades from their mobile platform and 58.9 trades overall in 2016, compared with 0.5 mobile trades and 18.3 trades overall in 2013. Overall satisfaction among mobile users has increased to 828 (on a 1,000-point scale) from 816 during that period vs. to 796 from 789 among non-mobile users.

“Self-directed firms are often focused on highly active traders who are critical because their transactions generate significant revenue, but these firms all have a large segment of less active clients who are looking for guidance and may currently lack the wealth or desire for a full service advisor,” said Foy. “Technology makes it possible for self-directed firms to meet the needs of these clients and retain them as their wealth grows.”   

The study, now in its 15th year, measures self-directed investors’ satisfaction with their investment firm based on performance in six factors (in order of importance): interaction; account information; trading charges and fees; product offerings; information resources; and problem resolution. Overall satisfaction in 2016 averages 775, up 12 points from 2015.

Study Rankings

Scottrade ranks highest in self-directed investor satisfaction with a score of 811. Charles Schwab & Co., Inc. ranks second with a score of 808, followed by Vanguard at 798.

The 2016 U.S. Self-Directed Investor Satisfaction Study is based on responses from more than 4,200 investors who make all of their investment decisions without the counsel of a personal investment advisor. The study was fielded in January 2016.

For more information about the JD Power U.S. Self-Directed Investor Study^SM visit http://www.jdpower.com/resource/us-self-directed-investor-satisfaction-study

See the online press release at http://www.jdpower.com/press-releases/2016-us-self-directed-investor-satisfaction-study

Media Relations Contacts

John Tews; Troy, Mich.; 248-680-6218; [email protected]

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

 

 

Investors Adopt More Hands-On Approach to Advisors, Says JD Power Full Service Investor Satisfaction Study

2016-03-24

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CHICAGO, Ill.: 7 April 2016 — The full service investment advisory industry is undergoing a historic shift, driven by an actively engaged investor population that is demanding a more hands-on approach from their advisors. According to the JD Power 2016 U.S. Full Service Investor Satisfaction Study,^SM released today, a steadily increasing number of investment advisory customers have disrupted conventional thinking about   full service and self-directed advisory services, favoring a hybrid approach in which advisors become validators, or sounding boards, but not final decision makers.

Rise of the Validator

JD Power research has identified three segments of full service investors, which are defined by customer preference for making financial decisions in consultation with a personal financial advisor:

• Validators want to make their own decisions, but still have access to an advisor for support and as a sounding board. 
• Collaborators interact with an advisor and depend on that guidance and advice for investment decisions. 
• Delegators want an advisor to make decisions on their behalf.

The percentage of full service investment advisory customers who are validators has increased steadily since 2013, and now accounts for 36% of all full service investors. In contrast, the percentage of collaborators has decreased steadily during the same period (to 51% in 2016 from 59% in 2013), while the number of delegators has remained flat. The trend is even more pronounced among Millennials (born 1982-1994), with 64% falling within the validator segment this year.

“The current evolution we’re seeing in investor preferences will likely be accelerated by the further development of new technologies, such as robo-advisors, and by regulatory changes, such as those just issued by the Department of Labor concerning fiduciary standards,” said Mike Foy, director of the wealth management practice at JD Power. “Full service firms will need to adapt to these changes by providing more value and transparency to investors, making a clear case for the value they provide vs. lower-cost alternatives.”

Following are additional findings of the 2016 study:

• Investor Satisfaction Remains Flat Despite Challenging Markets: Overall investor satisfaction remains essentially flat year over year (804 in 2016 vs. 807 in 2015 on a 1,000-point scale), despite the worst markets since the 2009 study. More than double the number of investors indicate their own financial situation is better than it was a year ago (29% better vs. 12% worse, respectively).  Most (59%) investors indicate their financial situation is about the same.

• Investors Not Getting Goals-Based Advice: Nearly 4 in 10 investors (38%) indicate their advisor did not help them set goals or discuss risk tolerance, and only 42% indicate their advisor met key performance indicators (KPIs) related to setting goals, implementing strategy and ongoing tracking.  Performance satisfaction scores are 117 index points higher among investors whose advisor discussed portfolio performance and goal-setting vs. those whose advisor just discussed portfolio performance and asset allocation (783 vs. 666, respectively).
• Confusion over Fees Remains a Challenge: Most investors still do not completely understand their fees (60% in 2016 vs. 56% in 2015), a problem likely to become worse with the proliferation of such low-cost alternatives as robo-advisors and regulatory changes such as the Department of Labor’s recently released rules on implementing a fiduciary standard for all retirement-related accounts. 

Study Rankings

Charles Schwab & Co., Inc. (837)ranks highest in overall investor satisfaction, followed by Edward Jones and Fidelity Investments (822 each) in a tie, and UBS Financial Services (810).

The study, now in its 14th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): financial advisor (formerly investment advisor); account information; investment performance; product offerings (formerly account offerings); commissions and fees; website; and problem resolution.

The 2016 U.S. Full Service Investor Satisfaction Study was fielded in January 2016 and is based on responses from more than 6,000 investors who make some or all of their investment decisions with a financial advisor.

Media Relations Contacts

John Tews; JD Power; Troy, Mich.; 248-680-6218; [email protected]

For more information about the JD Power U.S. Full Service Investor Satisfaction Study, visit http://www.jdpower.com/resource/us-full-service-investor-satisfaction-study

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

 

JD Power Presents President’s Award to Edward Jones

2016-01-14

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COSTA MESA, Calif.: 14 January 2016 — JD Power presented its prestigious President’s Award today to Edward Jones “in appreciation and recognition of its commitment to excellence in customer satisfaction.”

Finbarr O’Neill, president of JD Power, presented the award via video to Jim Weddle, managing partner for Edward Jones, at Edward Jones’ Annual Partners Meeting at its headquarters in St. Louis, Mo. Michael Foy, Dominic Langteau and David Wano from JD Power attended the meeting.

“Being focused on the client experience is at the heart of the Edward Jones culture,” said O’Neill. “We know that in your business a superior client experience goes hand-in-hand with providing superior support for the 13,000-plus financial advisors, and the branch office administrators that support them, who are the face of Edward Jones to your clients each and every day.”  

Edward Jones has ranked highest in the JD Power U.S. Full-Service Investor Satisfaction Study^SM in six of the past 10 years, has ranked highest seven consecutive times in the JD Power U.S. Financial Advisor Satisfaction Study^SM.

“The results Edward Jones has achieved in the JD Power studies—and more broadly in terms of client service excellence—don’t just happen by accident,” said O’Neill, noting that JD Power is  known as the “Voice of the Customer” globally across multiple industries as diverse as automotive, insurance, health care, telecom and travel.  “So we speak from experience when we say that the consistent excellence achieved by Edward Jones over the past decade is extremely rare for any company in any industry.” 

The President’s Award is an award presented periodically that recognizes individuals or companies demonstrating dedication, commitment and sustained improvement in serving customers. During the 40-year history of JD Power, only 11 companies have previously received the award.

Media Relations Contacts

John Tews; Troy, Mich.; 248-680-6218; [email protected]

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

About McGraw Hill Financial www.mhfi.com 

 

Advisor Loyalty Declines Due to Compensation and Leadership Concerns

2015-06-29

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WESTLAKE VILLAGE, Calif.: 1 July 2015 — There is an undercurrent of dissatisfaction among advisors as loyalty to their investment firm has declined, due in part to changes with compensation and a lack of confidence in firm leadership, according to the JD Power 2015 U.S. Financial Advisor Satisfaction Study^SM released today.

The study measures satisfaction among both employee advisors (those who are employed by their investment services firm) and independent advisors (those who are affiliated with a broker-dealer but operate independently). The study examines seven key drivers of advisor satisfaction: advisor/professional support; client/customer-facing support; compensation; firm leadership; operational support; problem resolution; and technology support.  Satisfaction is measured on a 1,000-point scale.

Overall satisfaction among employee advisors is 701, a 20-point decline from 2014. With respect to loyalty, 83 percent of employee advisors say they “probably will” or “definitely will” stay at their current firm for the next one-to-two years (down from 89% in 2014), with many citing reasons unrelated to long-term firm loyalty. Among advisors intending to stay, 38 percent cite the primary reason as either contract requirements, compensation or simply that they have no reason to move, compared with 43 percent who cite primary reasons associated with enduring loyalty, such as  firm leadership, culture, client focus or independence. In the independent segment, overall satisfaction is 773, which is 72 points higher than in the employee segment. Additionally, 89 percent of independent advisors say they “probably will” or “definitely will” stay with their current firm.

One key driver of declining advisor satisfaction and loyalty is compensation. Satisfaction with compensation has decreased among employee advisors, with 50 percent indicating negative changes to their payout during the past year, up from 41 percent in 2014. Just 9 percent of advisors indicate that their compensation plans have improved. Advisors with higher assets under management (AUM)—$150 million or more—are those that firms are most concerned about retaining; yet, they are more negatively impacted than advisors with lower AUM—less than $50 million. Many advisors believe their compensation plans are more aligned with corporate goals (86%) than with rewarding appropriate behaviors (64%), reflecting the perception among some advisors that there is pressure to sell products and services that may not be optimal for their clients. In contrast, in the independent segment, 72 percent of advisors indicate their compensation remained the same from 2014, while 11 percent indicate it improved. More than eight in ten (81%) of independent advisors indicate compensation rewards appropriate behaviors.               

Firm leadership also plays a critical role in cultivating advisor satisfaction and loyalty. Advisor perceptions of leadership—both at the executive and local or branch levels—leave much to be desired. Nearly half (42%) of employee advisors indicate firm leadership fails to create a strong culture of accountability, and 50 percent indicate their immediate supervisor fails to keep promises/commitments. Many advisors also indicate that effective top-down communication is lacking, with just 43 percent saying that leadership clearly communicates strategic goals. Executives need to ensure that the lines of communication are open between leadership and advisors—from the executive suite to the day-to-day face of leadership at the firm’s branch—which can contribute to a culture that advisors desire and help them to effectively manage and grow their practice better than they could elsewhere or out on their own. In the independent segment, 49 percent of advisors indicate firm leadership creates a strong culture of accountability, and 45 percent indicate corporate leadership clearly communicates strategic goals.

“Many firms have made changes that increase deferred compensation to advisors, which helps increase short-term retention, but doesn’t foster loyalty,” said Michael Foy, director of the wealth management practice at JD Power. “Given the demographics of the advisor market and the stated goal of many firms to continue to invest in and grow their wealth management business, the demand for proven, successful advisors is likely to increase over time. While there is no evidence of an imminent mass exodus of financial advisors from their firms, we know that when advisors decide to leave their firm, they tend to take most of their clients and assets with them. Firms can’t afford to rely solely on short-term retention tactics like contracts and deferred compensation to retain these advisors. They need to build a culture that inspires loyalty.”

KEY FINDINGS

• Overall satisfaction among Gen Y/Z[1] employee advisors is higher than among all other generations (809 vs. 787, respectively). Less experienced advisors benefit more from their affiliation with the firm from the training, mentoring and brand credibility compared with more established advisors. Additionally, Gen Y/Z advisors expect more technology support, compared with other generations. 
• While 92 percent of employee advisors indicate their firm provides tablet-friendly tools, just 34 percent actively use a tablet for business, suggesting firms need to do a better job communicating the value of using such technology and training advisors on how to leverage these tools.
• Social media adoption is increasing, with 29 percent of employee advisors indicating they use it to communicate with clients, up from 24 percent in 2014.  This is despite the fact that 45 percent of advisors indicate their firm does not permit this usage. 
• While still underrepresented in the industry, women advisors are more satisfied than men (754 vs. 703, respectively), and they also exhibit a higher degree of loyalty to their firm based on such aspects as culture and client focus (55% vs. 41%, respectively). Firms should ensure they are leveraging successful, highly satisfied women advisors as advocates to help attract more women to the profession and to their firm.

Advisor Study Rankings

In the employee advisor segment, Edward Jones ranks highest for a sixth consecutive year with a score of 925. Raymond James & Associates, Inc. (885) ranks second, followed by Charles Schwab & Co., Inc. (785).

The 2015 U.S. Financial Advisor Satisfaction Study is based on responses from more than 3,300 financial advisors. The study was conducted between January and April 2015. No award is presented in the independent advisor segment due to insufficient market representation in the 2015 study.

Media Relations Contacts

Jeff Perlman; Brandware Public Relations; Woodland Hills, Calif.; 818-317-3070; [email protected]

John Tews; Troy, Mich.; 248-680-6218; [email protected]

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

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