Category: Wealth ManagementUnited States

Yes, Self-Directed Investors Really Do Want Guidance from Their Firm

2015-05-20

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WESTLAKE VILLAGE, Calif.: 21 May 2015 — Being a self-directed investor doesn’t mean going it alone when it comes to achieving financial goals; self-directed investors really do want a guidance-based relationship with their firm, according to the JD Power 2015 U.S. Self-Directed Investor Satisfaction Study^SM released today.

The study, now in its 14th 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; account offerings; information resources; and problem resolution. Overall satisfaction in 2015 averages 763 (on a 1,000-point scale), unchanged since 2014.

Self-directed investors want and expect more from their firm than just low-cost trades, fast and reliable trade execution and access to research. While they may not be looking for a full time one-on-one advisor relationship, they are increasingly looking for a guidance-based relationship to help them establish and track performance against their personal financial goals. Investors with guidance-based relationships are much more likely to recommend their firm to friends and family as well as increase their investment levels with the firm.

Successful guidance-based relationships are based on three pillars: effective communications; relevant educational resources; and a robust and intuitive suite of digital tools that help investors with financial planning and portfolio management as well as tracking and monitoring investments. Firms that can effectively cultivate those relationships can satisfy clients and potentially retain them over the long term, which is especially important with respect to younger clients such as Gen Y[1] and Gen Z as their assets grow and financial needs become more complex over time.

With respect to investment style, 66 percent of self-directed investors describe themselves as true do-it-yourself investors seeking no advisor input, while 21 percent consider themselves “validators” who prefer to have a professional act as a sounding board for their ideas. The remaining 13 percent consider themselves “collaborators” who largely make decisions collectively with help from some sort of advisor. The number of validators and collaborators is even higher among Gen Y and Gen Z (38%) and women investors (38%), two critical and fast-growing segments of the investor market.    

“Self-directed investors may not be looking to delegate managing their money to an advisor, but they do value access to guidance when they are ready for it, whether that means a financial planning tool they can use on their tablet, a webinar about saving for their children’s education or an actual human being who serves as a sounding board for ideas by phone or in a local branch,” said Mike Foy, director of the wealth management practice at JD Power. “Firms need to make sure that their clients understand what’s available to them and how the overall value proposition relates to what they pay. In most cases, clients are getting a lot more value from their firm than just the ability to trade.”

2015 Self-Directed Investor Satisfaction Rankings

Charles Schwab & Co., Inc. ranks highest in self-directed investor satisfaction, with a score of 801. Charles Schwab & Co., Inc. performs well across all factors, particularly in interaction and account offerings. Vanguard ranks second with a score of 794, followed by Fidelity Investments at 791.

KEY FINDINGS

• ŸOverall, satisfaction is higher among self-directed investors who have a guidance-based relationship (828) than among those who do not (656).
• ŸWhen considering the three pillars of guidance-based relationships, each has a significant   impact on satisfaction: effective communication of products/services/seminars (+58 points), offering investment educational resources (+86) and providing digital tools (+114) for asset allocation, financial planning, and tracking/monitoring portfolio performance.
• ŸAmong self-directed investors with a guidance-based relationship, 64 percent say they “definitely will” recommend the firm, compared with 26 percent among those who do not have this type of relationship.
• With respect to share of wallet, 45 percent of investors who have a guidance-based relationship with their firm increased their investment levels, compared with only 29 percent of those whose relationship is not guidance-based.
• ŸOnly 40 percent of investors indicate they completely understand the fees they pay. However, investors who indicate they received an explanation of fees from their firm are over three times more likely to indicate they completely understand the fees, compared with those who did not receive such an explanation (50% vs. 16%).

The 2015 U.S. Self-Directed Investor Satisfaction Study is based on responses from more than 3,700 investors who make all of their investment decisions without the counsel of a personal investment advisor. The study was fielded in January and February 2015.

Media Relations Contacts

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

Anthony Popiel; Brandware Public Relations; Atlanta, Ga.; 770-649-0880; [email protected]

John Tews; JD Power; 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 

 

Aging Investors Unprepared to Transfer Wealth to Younger Generation, Advisors Need to Drive Process

2015-04-07

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WESTLAKE VILLAGE, Calif.: 9 April 2015 — With an aging full service investor demographic and an anticipated enormous generational transfer of wealth on the horizon, investment firms are not asking the right questions of their clients and may be at risk of losing assets if they fail to establish relationships now with the next generation, according to the JD Power 2015 U.S. Full Service Investor Satisfaction Study^SM released today.

The study, now in its 13th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): investment advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution. Overall investor satisfaction remains unchanged at 807 (on a 1,000-point scale) from 2014.

With a median age of 61 years among full service investors, investment advisors and firms are missing a tremendous opportunity to position themselves for the anticipated generational transfer of wealth over the next few decades. Despite 71 percent of investors who have named next-gen beneficiaries indicating a willingness to discuss those needs with their advisor, only 42 percent have actually been asked by their advisor to have such a conversation. When advisors ask about the needs of the next generation, not only does the number of contacts with beneficiaries and potentially new clients increase, but overall satisfaction is also higher among investors who are asked than among those who are not asked (854 vs. 793, respectively).  

“Talking to clients about their beneficiaries may feel awkward to many advisors, but most investors want their wealth to benefit the next generation,” said Mike Foy, director of the wealth management practice at JD Power. “Many times, investors themselves struggle in money-related conversations with their kids, and an advisor is in a unique position to be a bridge between generations. Firms that can effectively train and support their advisors in this regard have a real opportunity to differentiate their services.”     

KEY FINDINGS

• There is only a 5 point gap in satisfaction between the highest-ranked investment firms and the industry average (812 vs. 807, respectively), suggesting there is a limited perception of differentiation with the client experience among industry firms.
• Similar to their lack of preparation for intergenerational wealth transfers, firms are also not proactively preparing for intragenerational wealth transfer events. Nearly one-fourth (23%) of investors say their advisor never interacts with their spouse or partner, missing a tremendous opportunity to retain the household wealth over the long term.
• Among investors who have named next-gen beneficiaries, 33 percent of the beneficiaries have an account or product with that same firm. The proportion of beneficiary accounts increases by 24 percentage points when advisors ask their investors about beneficiary needs.
• Women investors are becoming an increasingly important segment of the market, but merely working with a female advisor does not improve their overall satisfaction. According to the study, there’s a greater impact on satisfaction when firms recruit, train and retain advisors of either gender with the skills needed to build trust-based collaborative relationships. Satisfaction is more highly impacted among women investors who say they “work with their advisor as a team” than among men who say the same (+58 vs. +31, respectively).
• There are generational differences in terms of the trust investors place in their advisors. Slightly more than two-thirds (67%) of Pre-Boomers (born before 1946) indicate their advisor makes recommendations in their best interest, while just 40 percent of Gen Y (1977-1994) and Gen Z (1995-2004) say the same.[1]
• Higher satisfaction translates into significant increases in advocacy, loyalty and share of investment wallet for firms. Among firms ranking above the industry average, 48 percent of investors say they “definitely will” recommend their firm vs. 37 percent of investors with firms ranking below average.  With respect to loyalty, 46 percent of investors of firms that perform above industry average say they “definitely will not” switch firms, compared with 38 percent of investors with firms that perform below average. While there is only a 2 percentage point gap in share of wallet between above- and below-average firms (86% vs, 84%, respectively), it can translate into a significant increase in a firm’s assets under management.  

Study Rankings:

Edward Jones and Fidelity Investments rank highest in a tie in overall investor satisfaction with a score of 812 each. Edward Jones performs particularly well in the investment advisor and investment performance factors, and Fidelity Investments performs particularly well in account information and account offerings. Charles Schwab & Co., Inc. and Wells Fargo Advisors rank third in a tie with a score of 810 each. Raymond James follows scoring 809.

The 2015 U.S. Full Service Investor Satisfaction Study was fielded in January and February 2015 and is based on responses from more than 5,300 investors who make some or all of their investment decisions with an investment advisor.

Media Relations Contacts

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

John Tews; JD Power; 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 

 

Canadian Investors Are Increasingly Satisfied When Discount Brokerage Firms Communicate Regularly and Tailor Investment Advice

2014-09-17

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TORONTO: 22 September 2014 — Investors are increasingly satisfied when discount brokerage firms go beyond providing a robust technology platform and low transaction fees by communicating regularly and providing tailored financial guidance and useful investment tools to help them achieve their goals, according to the JD Power 2014 Canadian Discount Brokerage Investor Satisfaction Study^SM released today.

The study, now in its sixth 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. Scores for each factor are reflected in an index based on a 1,000-point scale.

Interaction, particularly with the website, is the highest-weighted factor in determining overall satisfaction. Gen X and Y,[1] considered technology-savvy investors, have the highest expectations and are the least satisfied groups with their firm’s website (756 and 776, respectively). Satisfaction with ease and speed of making trades, appearance, and ease of navigating the website are particularly low among these younger investors. Additionally, fewer Gen Y investors than those from other age groups perceive the financial guidance and information provided by their firm is tailored to meet their goals.

“Advice and guidance are not only for full-service firms. Discount brokerage investors are not just traders focused exclusively on speed and low transaction fees; they really do want a relationship with their firm and access to tools and guidance that help them achieve their financial goals,” said Mike Foy, director of the wealth management practice at JD Power. “Discount brokerage investors may not have a dedicated financial advisor, but they do want help in making investment decisions, whether that’s through using financial planning or investment tools, or participating in educational seminars. When firms leverage what they know about their clients to deliver information and tools that are tailored to their specific needs, satisfaction improves significantly, along with loyalty and the amount of assets invested.”

KEY FINDINGS

• Overall investor satisfaction with discount brokerage firms in Canada increases significantly to 736, up by 12 points from 2013.
• Highly satisfied investors rely on the tools and seminars offered by their firm. When firms meet the three key performance indicators (KPIs) related to those resources—offering investment seminars; investors are aware of and use at least one investment tool; and are aware/use a financial planning tool—satisfaction is 819, compared with 671 when these KPIs are not met.
• In addition to offering multiple investment tools, firms must provide advice tailored to investors’ goals. When firms offered financial advice and guidance through “very useful” investment tools, satisfaction is 868, compared with 753 when not offered. Further, satisfaction is 782 when financial advice and guidance are tailored to investors’ goals, compared with 679 when it is not.
• Nearly one-third (31%) of highly satisfied discount brokerage investors (overall satisfaction scores of 900 or above) intend to increase the amount invested with the firm vs. 20 percent of less satisfied investors (scores of 699 or lower). Nearly three-fourths (73%) of highly satisfied investors say they “definitely will” recommend their firm vs. 7 percent of less satisfied investors who say the same.
• Frequent client communication is a key driver of satisfaction as well as awareness of tools and resources.  Overall satisfaction is 777 among investors whose firm contacted them two or more times during the past 12 months about products, services and seminars vs. 721 among those whose firm did not.
• Lower trading charges and fees do not guarantee investor satisfaction. However, when investors “completely” understand their fee structure, satisfaction is higher (787) than when they do not “completely” understand (699).

Discount Brokerage Investment Firm Rankings

Disnat ranks highest in discount brokerage investor satisfaction with a score of 772, and performs particularly well in the interaction, information resources, account information and account offerings factors. Following in the rankings are National Bank Direct Brokerage (757); RBC Direct Investing (751); and TD Direct Investing (744).

The 2014 Canadian Discount Brokerage Investor Satisfaction Study includes responses from more than 2,500 investors who use investment services with discount brokerage firms in Canada. The study was fielded from May 16, 2014 through June 16, 2014.

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 

 

Self-Directed Investors Desire Support and Financial Tools to Help Guide Investment Decisions

2014-05-21

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WESTLAKE VILLAGE, Calif.: 22 May 2014 — Having the least expensive trading fees or the latest tools are no longer the key inducement for firms in attracting and retaining self-directed investors, who want a stronger relationship with their firm and more guidance from them, according to the JD Power 2014 U.S. Self-Directed Investor Satisfaction Study^SM released today.

The study, now in its 13th 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; account offerings; information resources; and problem resolution. Overall satisfaction in 2014 averages 763 (on a 1,000-point scale), up from 752 in 2013.

The study finds that while self-directed investors still make their own investment decisions, they are looking for support from their firms in the form of tools, education and ability to interact with personnel when they have questions or need guidance. Self-directed young investors (35 years and younger) place a premium on access to relevant insights and advice. Satisfaction is not only driven by low trading fees, data and tools, but also by how well firms help investors make prudent decisions and reach their financial goals.

“We’re seeing a tremendous shift in the industry where price alone is not enough to satisfy self-directed investors, especially young investors, who are important for the long-term future of the business and who are begging for a change,” said Craig Martin, director of the wealth management practice at JD Power. “Self-directed firms’ traditional pricing approach is highly reminiscent of the free-checking model used by retail banks, in which a small portion of the customer base was subsidizing the free services provided to all customers, and the perceived value of the relationship was diminished. We saw the ramifications of that play out in 2010 when regulations created massive disruptions from which the banks are still recovering.”

Martin noted that the shift in consumer demand may require self-directed firms to change their focus. “Firms need to take an ‘outside in’ view that focuses on customer needs in lieu of their current ‘inside out’ approach that has led to an industry-wide pricing and technology race.”

In a self-directed relationship, online investment tools are the main vehicle firms use to answer investors’ questions and offer guidance on how to achieve their financial objectives. There are two key elements in a successful investment offering: first, investors must be aware of the tools that matter to them; and second, investors must see the value of the tools available so they are driven to use those tools.

Financial planning tools in particular drive satisfaction with information resources and increase investor confidence in their investment firm, often leading to a propensity to increase the amount of their investments. When an investor is aware of and uses their firm’s financial planning or asset allocation tools, satisfaction improves by an average of 80 points, while the use of tracking or monitoring tools improves satisfaction by 96 points. The use of tools also increases the amount investors plan to invest with their firm in the next 12 months by as much as 16 percentage points.

The study finds the current self-directed pricing model is causing investors to question the transparency of charges and fees. Nearly two-thirds (63%) of self-directed investors indicate they do not completely understand their firm’s fee structure, and 74 percent of this group has made fewer than five trades in the past year. Satisfaction among investors who do not understand their fee structure at all averages 681, compared with 831 among those who completely understand the fee structure.

2014 Self-Directed Investor Satisfaction Rankings

Scottrade ranks highest in self-directed investor satisfaction for a second consecutive year, with a score of 813. Scottrade performs well across all factors, particularly in trading charges and fees.   Vanguard ranks second with a score of 805, followed by Charles Schwab & Co., Inc. at 797.

KEY FINDINGS

• Among the various channels used to interact with their firm, 85 percent of investors overall use the firm’s website and 10 percent use a mobile device. Website use among young investors is decreasing (86% in 2014 vs. 91% in 2011), while their use of mobile devices is increasing, compared with 2011(21% vs. 13%, respectively). In comparison, website usage among retirement investors (62 years and older) is increasing (84% in 2014 vs. 80% in 2011), as is their use of mobile devices (5% vs. 2%, respectively).
• ŸWhile the website is the main source of most investment activities, 61 percent of investors with questions still prefer to speak with a representative by phone.
• ŸWhile not all firms have a branch presence, such an offering allows investors to have a personal interaction, which can increase their knowledge of self-directed tools. Among the 17 percent of investors who have visited a branch office, 29 percent did so to seek investment advice.

The 2014 U.S. Self-Directed Investor Satisfaction Study is based on responses from 3,764 investors who make all of their investment decisions without the counsel of an investment advisor. The study was fielded in January and February 2014.

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

About McGraw Hill Financial www.mhfi.com 

 

Investment Firms That Mentor Young Advisors and Provide Robust Technology May Have a Competitive Advantage Over the Next Decade

2014-06-26

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WESTLAKE VILLAGE, Calif.: 30 June 2014 — While compensation and firm leadership are the top factors driving advisor satisfaction today, investment firms need to look ahead and begin planning for a generational shift of retiring advisors during the next decade, according to the JD Power 2014 U.S. Financial Advisor Satisfaction Study^SM released today.

With one-third of today’s advisors retiring in the next decade,[1] and more experienced advisors considering the increased flexibility and financial benefits of becoming Registered Independent Advisors (RIAs), investment firms need to act now to be prepared for the future. Firms that focus on mentoring newer advisors and providing them with robust technology are more likely to have a competitive advantage over firms that do not.

The study, which has been redesigned for 2014, 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. 

Overall satisfaction among employee advisors is 721 (on a 1,000-point scale) and 778 among independent advisors.

“As financial markets continue to do well and overall advisor satisfaction remains relatively high, investment firms may be operating with a false sense of security for their future success,” said Michael Foy, director of the wealth management practice at JD Power. “To prepare for the future, investment firms need to implement effective processes to mentor and train young advisors and provide them with the technology and tools that will enable their success.”

The study finds training and mentoring has a positive impact on satisfaction for advisors at all stages of their career. Satisfaction is significantly higher among less-experienced advisors (fewer than 10 years) who participate in a mentoring program than among those who do not participate (850 vs. 730, respectively). However, 33 percent of advisors are not aware of whether their firm offers a mentoring program, suggesting that part of the challenge is related to effective communications.

Firms also need to address succession planning for advisors nearing the end of their career, so they can transition out of the business in an optimal way for themselves and their clients. Ninety-four percent of advisors with 20-plus years of experience and who say they “definitely will” remain with the firm for the next 1-2 years indicate their firm offers succession planning resources and tools, while only 62 percent of those who “probably will not” or “definitely will not” remain with the firm say the same. Foy noted the cost for firms to recruit experienced advisors to replace those who leave is likely to continue to increase as more advisors move into retirement, underscoring the importance of training and retaining talent.

KEY FINDINGS

• Firm leadership plays a key role in cultivating advisor loyalty, specifically through building a values-oriented, client-focused culture, and effectively communicating a strategy that advisors believe in. Approximately two-thirds (62%) of advisors loyal to their firm believe leadership clearly communicates strategic goals vs. just one-third of advisors who are neutral toward their firm.   
• Approximately nine in 10 advisors (87% of employees and 93% of independents) say they “definitely will” or “probably will” remain at their current firm for the next 1-2 years. Among those advisors, 44 percent of employees and 52 percent of independents are loyal advisors, identified in the study as those who indicate cultural values, freedom/independence and client focus as primary reasons for their intention to stay with their firm, while 38 percent of employees and 32 percent of independents are neutral and intend to remain primarily for compensation or contract requirements.
• Advisor satisfaction improves when their compensation package is competitive, clear and rewards appropriate behaviors. Among the 36 percent of advisors who lack a complete understanding of their plan, compensation satisfaction is significantly lower than among those who have a complete understanding (631 vs. 781, respectively).
• Among advisors using smartphones and/or tablets, 84 percent indicate their firm provides smartphone- and/or tablet-friendly tools; yet, just 28 percent of advisors are using both devices for business, suggesting a need for more effective communications and training regarding these tools.
• Nearly one-half (47%) of employee advisors and 20 percent of independent advisors indicate their firm does not allow the use of social media to communicate with clients. Among those who are permitted to use social media, 45 percent of employee advisors and 40 percent of independent advisors take advantage of the opportunity.

Advisor Study Rankings

In the employee advisor segment, Edward Jones ranks highest for a fifth consecutive time with a score of 904. Raymond James & Associates, Inc. (867) ranks second, followed by RBC Wealth Management (834).

In the independent advisor segment, Commonwealth Financial Network ranks highest for a fourth consecutive time with a score of 954. Cambridge Investment Research, Inc. ranks second (913), followed by Raymond James Financial Services, Inc. (899).

The 2014 U.S. Financial Advisor Satisfaction Study is based on responses of more than 3,900 financial advisors. The study was conducted between January and April 2014.

Media Relations Contacts

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

Syvetril Perryman; Westlake Village, Calif.; 805-418-8103; [email protected]

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

About McGraw Hill Financial www.mhfi.com 

 

Many Full Service Investment Firms are Missing the Mark with Younger Investors

2014-04-10

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WESTLAKE VILLAGE, Calif.: 10 April 2014 — While overall investor satisfaction continues to rise, there is a clear satisfaction gap between young investors (35 years and younger) and older investors, according to the JD Power 2014 U.S. Full Service Investor Satisfaction Study^SM released today.

Overall investor satisfaction with full service investment firms improves to 807 (on a 1,000-point scale) in 2014, up from 789 in 2013. Young investors (35 years and younger) are overall less satisfied with their full service investment firm than their older investor counterparts, averaging 791 compared with 806 for investors nearing retirement and 827 for retirement investors.  

“Advisors tend to focus their attention on older, more affluent investors with whom they have more experience,” said Craig Martin, director of investment services at JD Power. “They are comfortable with this group and their preferences, but when they interact with younger investors they have challenges connecting.  They often try to use the same approach that has been successful with their older clients, but it often misses the mark.”

Younger investors are less likely than older investors to characterize the advisor-investor relationship positively. Among young investors, less than half (44 percent) indicate they “strongly agree” that their advisor has a good understanding of their investment goals. In contrast, 71 percent of retirement investors say the same. Additionally, only 39 percent of young investors “strongly agree” that their advisor makes efforts to ensure they understand where their investments are made and why, compared with 66 percent of retirement investors. 

“Understandably, firms are going to place added focus on the clients and prospects with the greatest wealth,” said Martin. “But often the time and effort that is spent trying to engage with younger investors is not productive because it fails to demonstrate an understanding of their unique needs and wants. Advisors know that satisfying their younger clients is crucial for the long-term growth of their business.”

KEY FINDINGS

• Communication is an important component of building strong relationships; however, there is considerable variation among the age groups in terms of the preferred communication channel; the frequency of communicating; and the subject of the communication. While phone is still the most preferred contact channel overall, younger investors are increasingly open to other channels, including email and social media.
• While proactive contact is important to building strong relationships, over-communicating can come across as pushy or unproductive. Satisfaction among older investors begins to wane after eight to 11 contacts, while satisfaction among younger investors peaks at three to four contacts. To ensure the most value is gained from proactive communications, advisor contacts need to focus on the topics most pertinent to the target segment of the population.
• Like consumers in general, investors want to understand exactly what they’re paying for. Among the 43 percent of investors who say they “completely” understand their investment firm’s fee structure, satisfaction with commissions and fees averages 750. That score drops to 619 among the 46 percent of investors who only “partially” understand their fees. At the same time young investors have the lowest rate (65%) of indicating advisors explaining the fee structure to them, a KPI.
• While only 5 percent of investors experience a problem with their investment firm, overall satisfaction declines by 115 points when they do. Problem incidence among young investors is 12percent—more than double industry average—compared with 10 percent in 2013.

The study, now in its 12th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): investment advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution.

Study Rankings

Fidelity Investments ranks highest in overall investor satisfaction with a score of 842. Fidelity Investments, which ranked second in 2013 and has improved by a significant 32 points year over year, performs particularly well across all seven factors. Edward Jones ranks second with a score of 835, and Charles Schwab & Co., Inc. ranks third with a score of 825.

The 2014 U.S. Full Service Investor Satisfaction Study was fielded in January and February 2014 and is based on responses from more than 4,400 investors who make some or all of their investment decisions with an investment advisor.

About JD Power and Advertising/Promotional Rules http://www.jdpower.com/about/index.htm
About McGraw Hill Financial www.mhfi.com 

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Despite Efforts to Legislate Greater Accountability from Financial Advisors, Consumer Understanding of The Differences between Fiduciary and Suitability Standards is Low

2011-06-16

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WESTLAKE VILLAGE, Calif.: 16 June 2011 — While recent legislation has sparked debate about suitability vs. fiduciary standards, a majority of full service investors do not understand the difference between the two, according to the JD Power and Associates 2011 U.S. Full Service Investor Satisfaction Study^SM released today.

The study finds that 85 percent of full service investors either have not heard of or do not understand the difference between a suitability standard (where advisors are required to make investments they deem suitable for their clients) and a fiduciary standard (where advisors are required to act in the best interests of their clients and disclose all conflicts of interest). Among those full service investors who are currently in a fiduciary relationship, 57 percent state that this increases their comfort level with their advisor, while 42 percent state that it decreases their comfort level.

“While higher levels of satisfaction are generally associated with clients in fiduciary relationships, legislating all advisors to this standard carries an unintended consequence of additional compliance oversight, which could translate into significantly higher costs—likely to ultimately be passed back to investors,” said David Lo, director of investment services at JD Power and Associates. “Placing more focus on key best practices in client management empowers advisors with more actionable direction and achieves satisfaction levels on par with satisfaction among investors in a fiduciary relationship—844 vs. 841, respectively.”

According to Lo, key best practices of client service include (in order of importance):

• Clearly communicating reasons for investment performance
• Clearly explaining how fees are charged
• Proactive advisor contact regarding new products and services or accounts four times in the past 12 months
• Returning client calls/inquiries within the same business day
• Reviewing or developing a strategic plan within the past 12 months
• Providing a written financial plan
• Discussing risk tolerance changes and incorporating into plan where appropriate in the past 12 months

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

RBC Wealth Management ranks highest in investor satisfaction with a score of 814 on a 1,000-point scale and performs particularly well in investment advisor and account information. Charles Schwab & Co. follows with a score of 805, performing particularly well in account offerings and website. Fidelity Investments ranks third with a score of 796.

The study also finds that usage of online communication channels has increased compared with previous years:

• Fifty-nine percent of full service investors have visited their firm’s website in the past 12 months, up from 52 percent in 2009.
• Fifty-one percent of full service investors have exchanged an email with their advisor in 2011, compared with 19 percent in 2008.
• Among investors who visit their firm’s website, those older than 64 years average more than 35 visits to their firm’s website per year. In comparison, investors younger than 45 years average 12 visits per year and investors between the ages of 45 and 64 average 23 visits per year.
• Reviewing documents posted by an advisor and reviewing tax information are among the most common tasks performed by investors visiting their firm’s website.

“Proactive outreach from advisors goes a long way in developing the client-advisor relationship, and expectations as far as frequency of contact have increased coming out of the recession,” said Lo. “Advisors can meet this increased need by utilizing more non-traditional forms of communication, such as email and the firm’s website, which is much more widely accepted by full service investors of all ages.”

The 2011 U.S. Full Service Investor Satisfaction Study is based on responses from more than 4,200 investors who make some or all of their investment decisions with an investment advisor. The study was fielded in March 2011.

About JD Power and Associates
Headquartered in Westlake Village, Calif., JD Power and Associates is a global marketing information services company providing forecasting, 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. 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
Founded in 1888, The McGraw-Hill Companies is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. With leading brands including Standard & Poor’s, McGraw-Hill Education, Platts energy information services and JD Power and Associates, the Corporation has approximately 21,000 employees with more than 280 offices in 40 countries. Sales in 2010 were $6.2 billion. Additional information is available at http://www.mcgraw-hill.com.

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/business/about-us/press-release-info

 

 

 

 

 

Self-Directed Investor Satisfaction with Trading Charges and Fees Declines Considerably from 2010

2011-06-30

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WESTLAKE VILLAGE, Calif.: 30 June 2011 — Satisfaction with trading charges and fees among self-directed investors has decreased significantly from 2010, according to the JD Power and Associates 2011 U.S. Self-Directed Investor Satisfaction Study^SM released today.

The study, now in its 10th year, measures customer satisfaction with investment firms based on performance in six factors: interaction; account information; trading charges and fees; account offerings; information resources; and problem resolution.

The study finds that satisfaction with trading charges and fees averages 703 on a 1,000-point scale in 2011, a decrease of 30 points from 733 in 2010. This decline is largely driven by a lack of understanding of trading charges and fees—just 36 percent of investors say they “completely” understand their commission and fee structure, compared with 52 percent in 2010. Similarly, 48 percent of investors say they have had their non-trading charges explained to them, compared with 65 percent in 2010.

“Providing a clear explanation and disclosure of all fees, particularly non-trading charges such as minimum balance fees, inactivity fees, and account maintenance fees, is critically important for firms to maintain satisfaction among self-directed investors,” said David Lo, director of investment services at JD Power and Associates.  “While firms are certainly open to assess fees as they deem suitable, transparency is critical, as nothing is more frustrating to investors than being surprised with fees they were not expecting.”

The study also finds that self-directed firms may differentiate themselves by delivering value to investors through the account offerings and information resources provided. For instance, 71 percent of investors say that they are not aware of or do not use at least one financial planning tool. When this key practice is missing, overall satisfaction declines by 66 points, on average.

“There are opportunities for firms to deepen their relationship with self-directed investors by ensuring they’re aware of the value the firm adds through the tools and resources provided,” said Lo. “In fact, even among self-directed investors with similarly high levels of satisfaction, investors who are aware of and use at least one of their firm’s tracking and monitoring or financial planning tools are more likely to recommend their firm, compared with those who aren’t aware of or don’t use the tools.”

USAA ranks highest in self-directed investor satisfaction with a score of 831 and performs particularly well in account offerings, information resources, account information and interaction. Scottrade follows in the rankings with a score of 804, performing particularly well in trading charges and fees. Charles Schwab & Co. closely follows Scottrade with a score of 803.

The 2011 U.S. Self-Directed Investor Satisfaction Study is based on responses from 4,274 who make all of their investment decisions without the counsel of an investment advisor. The study was fielded in March 2011.

About JD Power and Associates
Headquartered in Westlake Village, Calif., JD Power and Associates is a global marketing information services company providing forecasting, 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. 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
Founded in 1888, The McGraw-Hill Companies is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. With leading brands including Standard & Poor’s, McGraw-Hill Education, Platts energy information services and JD Power and Associates, the Corporation has approximately 21,000 employees with more than 280 offices in 40 countries. Sales in 2010 were $6.2 billion. Additional information is available at http://www.mcgraw-hill.com.

USAA’s insurance products are open only to U.S. military personnel and their families; however, its self-directed investment products have no membership requirements. 

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. /corporate

 

Compensation Is Not the Primary Driver of Financial Advisor Satisfaction with Their Firm

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WESTLAKE VILLAGE, Calif.: 29 March 2012 — Adhering to best practices regarding firm performance, technology, compliance and administrative support yield the highest levels of advisor satisfaction, even among advisors who receive payouts that are lower than industry average, according to the JD Power and Associates 2012 U.S. Financial Advisor Satisfaction Study^SM released today.

The study measures the satisfaction of 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 nine key drivers of employee advisor satisfaction: firm performance; compensation; contact; people; job duties; work environment; products and offerings to clients; technology; and services and support offered to financial advisors.  The study also examines eight key drivers of independent advisor satisfaction: firm performance; contact; people; job duties; compensation; technology; products and offerings to clients; and services and support offered to financial advisors.

“Providing the right mix of technology and support to advisors, thus optimizing the time they spend with clients, has the biggest impact on satisfaction,” said David Lo, director of investment services at JD Power and Associates. “It’s no coincidence that the firms struggling with the key best practices identified in the study are also paying the highest retention and signing bonuses to compensate for a poorer work experience.”

The study also finds that firm performance continues to be the most important factor that drives advisor satisfaction among both employee and independent advisors.  Satisfaction is based on advisors’ perceptions of their firm, including senior management that support the firm’s mission and values, the firm having a clear set of priorities and objectives and the firm acting in the best interest of clients.   

“Ultimately, financial advisors want to work with a firm whose actions are in the best interest of clients,” said Lo. “Firms that stray from this fundamental principle diminish the connection with their advisors and eventually damage the overall culture of the firm.”

Lo said that the most common disconnects with senior management involve pushing non-investment products and services as well as keeping advisors from client-facing work due to excessive administrative burden.

Additionally, best practices pertaining to compliance, as well as administrative and technology support, have a significant impact on advisors’ perceptions of their firm.  Best practices include technology and software solutions that are aligned and integrated with workflow processes and addressing and resolving compliance issues quickly and efficiently.  

Advisor Satisfaction Rankings

Edward Jones ranks highest in overall satisfaction among employee advisors for a second consecutive study with a score of 901 on a 1,000-point scale, and performs particularly well in the technology and firm performance factors. Raymond James and Associates, Inc., ranks second overall (864), and performs well in the compensation and firm performance factors.

Commonwealth Financial Network ranks highest in overall satisfaction among independent advisors for a second consecutive study with an overall score of 917. The firm also earns high scores in the job duties, firm performance and technology factors. Raymond James Financial Services follows in the rankings (887), performing well in firm performance and firm’s services and support offered to financial advisors.

The 2012 U.S. Financial Advisor Satisfaction Study is based on responses of nearly 2,800 financial advisors. Survey sample and industry weighting was provided by Qualified Media and Investment News. The study was conducted between November 2011 and January 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 public 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 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:

John Tews; JD Power and Associates; Troy, Mich.; (248) 680-6218; [email protected]
Syvetril Perryman; Westlake Village, Calif.; (805) 418-8103; [email protected]
Jeff Perlman; Brandware Public Relations; Woodland Hills, Calif.; (818) 598-1115; [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

 

Key Areas of Full Service Investor Satisfaction Continue to Lag Pre-Recession Levels

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WESTLAKE VILLAGE, Calif.: 10 May 2012 — While overall investor satisfaction with full service investment firms has nearly stabilized at pre-recession levels, satisfaction continues to decline in the most critical factors that drive overall satisfaction, according to the JD Power and Associates 2012 U.S. Full Service Investor Satisfaction Study^SM released today.

The study, now in its 10th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): investment advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution.

The study finds that overall satisfaction has improved to 775 on a 1,000-point scale, up from 772 in 2011, but down 1 index point from the 2008 study (776). Overall investor satisfaction declined to a low of 731 in 2009.

“On the surface, some measures of satisfaction would suggest everything is back to normal, but that is not the case,” said David Lo, director of investment services at JD Power and Associates. “On a cautionary note, satisfaction has declined in the three most critical factors.”

Satisfaction is lower in 2012 than in 2008 with the three factors that are most critical to customer satisfaction–financial advisor, investment performance and commissions and fees. Despite lower scores in three factors–financial advisor (854 vs. 867 in 2008), investment performance (699 vs. 737 in 2008) and commissions and fees (636 vs. 700 in 2008)–the incidence of investor contact has increased in 2012. For example, the average number of contacts from the advisor regarding portfolio/asset allocation has increased to 3.2 per year, up from 2.3 in 2008, while the average number of annual calls from the advisor regarding investment performance has increased to 3.3 this year from 2.2 last year.

“Advisor contact levels have not declined. In fact, the frequency of proactive outreach regarding investors’ portfolio and investment performance has increased slightly,” said Lo. “What’s happening is that investor expectations have increased, due in part to the recovery period we’re in, but also due to increased transparency driven by social media having become more of a mainstream communication platform.”

Among firms included in the study, Edward Jones ranks highest in investor satisfaction with a score of 803 and performs particularly well in the investment advisor and account information factors. Investors with Edward Jones are also highly satisfied with their advisor returning calls within one business day and in developing a collaborative relationship.Fidelity Investments ranks second with a score of 800, followed by Charles Schwab & Co., Inc. at 787.

Social Media Drives Transparency for Investors

Lo said investor expectations are increasing–driven by transparency created by the Web and their use of social media–which is putting added pressure on investment firms.

“This is a bad news-good news situation for investment firms,” said Lo. “The bad news is that investment firms have to work harder to satisfy their investors.The good news is that the firms that work harder are able to differentiate themselves, and positive sentiment on social media will help them do that.”

At the same time, this creates a win-win situation for investors, who have access to more information than ever before. “Due to significant increases in the adoption and usage of social media outlets, investors have the ability to share their experiences, strategies developed with their advisor, and even fee information in a far-reaching and real-time forum,” said Lo.

Research conducted by JD Power’s Consumer Insight and Strategy Group[1] to track social media activity finds that:

• The most common theme of discussions among investors is trust in their advisor or broker
• Lack of trust prompts investors to search for a new investment firm
• Potential investors use social media to seek advice from others to find a trustworthy firm or broker
• Investors typically share advice they receive from their investment firm with others, usually with the intent of validating their financial plan
• Investors are increasingly sensitive to fees and costs, and use social media as a means to compare their firm’s fees with those charged to others who discuss the issue online

The 2012 U.S. Full Service Investor Satisfaction Study is based on responses from more than 4,400 investors who make some or all of their investment decisions with an investment advisor. The study was fielded in February 2012.

Things to Consider When Selecting an Investment Firm
For consumers who are considering a full service investment firm, JD Power and Associates offers the following tips:

• Shop around to compare firms, and pay close attention to how they will manage your account and how they charge commissions and fees.
• Use the Web to see what others are saying about investment firms. Look at both the negative and the positive comments posted on social media sites to get a balanced perspective.
• Consider your investment needs and look for a firm that is best suited to meet them. Some firms specialize in more sophisticated financial planning that caters to investors with a lot of money to invest, while others appeal to more mainstream investors.
• Develop a list of questions and ask the advisor those questions before signing an agreement. If you’re not comfortable with the answers, it’s likely you won’t be happy with the advisor, so keep looking.

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 public 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 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:

Jeff Perlman; Brandware Public Relations; Woodland Hills, Calif.; (818) 598-1115; [email protected]
Syvetril Perryman; Westlake Village, Calif.; (805) 418-8103; [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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[1] Full service investor social media research includes information gathered online from May 2011 through April 2012, which consisted of more than 5,000 online communications across various social media.