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Category: Wealth ManagementUnited States

  • 2012 U.S. Self-Directed Investor Satisfaction Study

    Overall Satisfaction with Self-Directed Investment Firms Increases, despite a Continued Decline in Satisfaction with Trading Charges and Fees

    1970-01-01

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    WESTLAKE VILLAGE, Calif.: 14 June 2012 — Although self-directed investors’ overall satisfaction with their investment firm has improved from 2011, satisfaction with trading charges and fees has decreased for a second consecutive year, according to the JD Power and Associates 2012 U.S. Self-Directed Investor Satisfaction StudySM released today.

    The study, now in its 11th year, measures customer satisfaction with investment firms based on performance in six factors: account information; account offerings; information resources; interaction; problem resolution; and trading charges and fees.

    Non-trading fees continue to be the primary contributor to dissatisfaction. The study finds that satisfaction averages 723 (on a 1,000-point scale) when investors do not pay a non-trading charge, compared with 613 when they are aware of maintenance fees and 628 when they are aware of inactivity fees. Overall, satisfaction with trading charges and fees is 697, down from 703 in 2011.

    However, overall satisfaction with investment firms has increased to 768 in 2012, compared with 764 in 2011. The increase is due to increases in satisfaction with interaction, information resources and account offerings.

    “Overall trading volume has dropped during the past couple of years, and similar to banks, investment firms are looking to compensate for lost revenue with fees,” said David Lo, director of investment services at JD Power and Associates. “Contrary to what some believe, this is not necessarily a bad thing, providing that firms are showing value to their investors in terms of resources and tools and ensuring investors clearly understand how and why they’re charged these fees.”

    The study also finds that using tools and resources to aid in investment decisions is closely associated with higher levels of satisfaction and more frequent trading activity. Among moderately active traders (one to 35 trades per year) who use real-time quotes/alerts, overall satisfaction averages 826 and the number of trades per year averages 9.6. Satisfaction among moderately active traders who are not aware of the tool averages 749, and the number of trades per year averages 5.3.

    “Providing the tools and resources that enable investors to make better decisions is really a win-win for the investors and investment firms,” said Lo. “We see that overall satisfaction and loyalty are much higher and trading activity is higher as well.”

    Research conducted by JD Power’s Consumer Insight and Strategy Group  to track social media activity finds that investors, as well as potential investors, are particularly interested in the availability of mobile platforms and apps that allow them to access account information or makes trades on the go.
     
    “While adoption is still relatively low, we see a lot of positive interest with mobile platforms in social media,” said Lo. “In many respects, social media can be viewed as a leading indicator of the importance of mobile platforms in the near future.”

    2012 Self-Directed Investor Satisfaction Rankings

    Charles Schwab & Co., Inc. ranks highest in self-directed investor satisfaction with a score of 801 and performs particularly well in account information, account offerings and information resources. Vanguard follows in the rankings with a score of 799, followed closely by Scottrade at 798.

    The 2012 U.S. Self-Directed Investor Satisfaction Study is based on responses from 3,733 investors who make all of their investment decisions without the counsel of an investment advisor. The study was fielded in February 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:

    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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  • 2013 U.S. Financial Advisor Satisfaction Study

    Positive Brand Image Increases Financial Advisor Satisfaction

    2013-04-11

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    WESTLAKE VILLAGE, Calif.: 11 April 2013 — As investor confidence grows and perceptions of wealth management firms improves, so do advisor perceptions of their firm—particularly among independent advisors—according to the JD Power and Associates 2013 U.S. Financial Advisor Satisfaction StudySM released today.

    Key Findings

    • Satisfaction among independent advisors has improved by 29 points since 2010, compared with a 12-point increase among employee advisors during the past two study cycles.
    • Highly satisfied advisors want their firm or broker-dealer to focus on customers, not just profits.
    • More than one-third (36%) of employee advisors and 23 percent of independent advisors (31% combined) are indifferent toward their firm or broker-dealer, making them at risk for changing firms.

    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 nine key drivers of employee advisor satisfaction (in order of importance): 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 (in order of importance): firm performance; people; contact; job duties; compensation; technology; products and offerings to clients; and services and support offered to financial advisors.

    While overall satisfaction among employee advisors is relatively unchanged in 2013, compared with 2012, it is up 12 points (on a 1,000-point scale) since 2010, while overall satisfaction among independent advisors increases 20 points from 2012 and 29 points since 2010.

    “Generally speaking, individuals are happier when they are successful, and a financial advisor’s success is heavily dependent on the relationships they are able to develop with their clients,” said Craig Martin, director of investment services at JD Power and Associates. “The brand image of the firm an advisor works for or is affiliated with may have a direct impact on their client relationships and, as a result, may strongly influence advisor satisfaction. Advisor satisfaction is based on more than just firm brand image, but when client relationships are potentially harmed, it raises questions about the risks and rewards of being affiliated with a firm.”

    The study finds that the majority of advisors fall into one of two categories: those who have high satisfaction and are “dedicated” to their investment services firm or broker-dealer; and those who are less satisfied and are  “indifferent,” or those who lack a strong attachment that might otherwise impact their decision to remain with or leave a firm. 

    Dedicated advisors say they either “definitely will” or “probably will” remain with their current firm in the next year because they believe the firm is a good place to work; has strong cultural values and beliefs; and is focused on the customer rather than on the bottom line. Indifferent advisors, as a group, are not as satisfied with their firm or broker-dealer, but remain there because they have a financial incentive to stay; don’t have a good reason to leave; or are under contract and can’t leave.

    The study finds that 45 percent of employee advisors and 44 percent of independent advisors are dedicated (45% combined), while 36 percent of employee advisors and 23 percent of independent advisors are indifferent (31% combined). 

    “With indifferent advisors, because there is no strong connection to their firm, they are likely to be more open to discussions and opportunities with another firm or broker-dealer if the right offer comes along,” said Martin.  “Additionally, when an advisor leaves, they usually take a large percentage of their clients with them. That means the firm or broker-dealer not only loses an advisor, but also customers, and one of their competitors gains both. Given this combined effect, there’s potentially a substantial positive economic impact on the firms or broker-dealers that are able reduce their number of indifferent employee advisors and improve advisor retention.”

    So how can firms improve advisor satisfaction and increase loyalty? Findings from the study show that it begins with a positive corporate culture—being honest and focusing on customers–and providing advisors with the tools and support they need to effectively service their clients. One of the key areas of advisor support is problem prevention and resolution.

    “The study finds that more than 40 percent of advisors experienced a problem, such as a computer issue or paperwork error, in the past 12 months,” said Martin. “Limiting the number of problems and ensuring effective problem resolution processes are in place are key components of advisor satisfaction.”

    Advisor Satisfaction Rankings

    Edward Jones ranks highest in overall satisfaction among employee advisor firms, with a score of 907, and performs particularly well in the work environment, job duties and firm performance factors. Raymond James & Associates, Inc., ranks second overall (891), and performs well in the compensation and firm performance factors.

    Commonwealth Financial Network ranks highest in overall satisfaction among independent advisor firms with an overall score of 945. The firm also earns high scores in the firm performance, people and job duties factors. Cambridge Investment Research, Inc., ranks second (895) and Raymond James Financial Services ranks third (879).

    The 2013 U.S. Financial Advisor Satisfaction Study is based on responses of more than 2,500 financial advisors. Survey sample and industry weighting was provided by Qualified Media and Investment News. The study was conducted between October 2012 and February 2013.

    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

    The McGraw-Hill Companies, to be renamed McGraw Hill Financial (subject to shareholder approval), is a powerhouse in credit ratings, benchmarks and analytics for the global capital and commodity markets. Leading brands include: Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, JD Power and Associates, McGraw-Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mcgraw-hill.com.

    Media Relations Contacts:

    Jeff Perlman; Brandware Public Relations; Woodland Hills, Calif.; (818) 598-1115; [email protected]
    John Tews; Troy, Mich.; (248) 680-6218; [email protected]

    Follow us on Twitter: @JDPower

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

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  • 2013 U.S. Full Service Investor Satisfaction Study

    Advisor/Investor Relationship Drives Full Service Investor Satisfaction

    2013-05-09

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    WESTLAKE VILLAGE, Calif.: 9 May 2013

    — As markets continue to rise, overall investor satisfaction with full service investment firms continues to increase for the second consecutive year, heavily influenced by the type of relationship that investors have with their advisor, according to the JD Power & Associates 2013 U.S. Full Service Investor Satisfaction StudySM released today. 

    Key Findings

    • Overall investor satisfaction with full service investment firms improves to 789, up 14 points from 2012.
    • Investors prefer a collaborative relationship with their investment firm.
    • Communication is crucial to investor satisfaction. The highest ratings come from investors contacted 12 or more times a year.

    The study, now in its 11th 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 was fielded in January and February 2013 and is based on responses from more than 4,750 investors who make some or all of their investment decisions with an investment advisor.

    Overall satisfaction has improved to 789 on a 1,000-point scale, up from 775 in 2012 and 772 in 2011.  Yet, in spite of a high correlation between investor satisfaction and actual market performance, satisfaction scores for some firms is lower than might be expected based on reported performance alone.

    “Logically, an improvement in investment performance is going to result in an increase in investor satisfaction,” said Craig Martin, director of investment services at JD Power & Associates. “However, not all firms achieve the same level of increase in satisfaction from this improvement. The study finds that there are two elements beyond investment performance separating firms with high satisfaction from those with low satisfaction: the person that investors credit for their investment performance and the relationship investors have with their advisor.”

    Firms with lower-than-expected satisfaction have the lowest proportions of investors who attribute investment performance to their own decisions rather than recommendations made by their advisor. These same firms also have a higher proportion of investors who defer their investment planning decisions to their advisor. This trend suggests that investors prefer advisor relationships in which they have an active role and there is a high degree of transparency.

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

    Communication Is Key to Improving Relationships

    Outside of making suggestions and decisions that lead to better investment performance, a key component to firms building stronger relationships with their investors is through communication. In addition to updates on portfolio performance, investors appreciate other meaningful insights, such as tips on new investments to consider.

    “Being absolutely transparent with investors about the performance of their portfolio, whether performance is good or bad, is absolutely critical for investment firms,” said Martin. “Beyond that, investors want communication that is meaningful, not just checking in once a month, but also providing insights, such as stocks to watch, tips for tax savings—things that add value.”

    Frequency and the right type of communication also play important roles in impacting investor satisfaction.

    “In the 2013 study, the firms with the highest satisfaction scores contacted investors more than 12 times during the past year, while those with lower scores only contacted investors approximately six to eight times,” said Martin. “However, firms should also understand how their investors prefer to be contacted. Some investors want regular updates via email, some prefer a phone call or an in-person conversation, while others prefer a combination of all three channels.” 

    The study finds that communicating the right information and using the delivery channels investors prefer at the optimal frequency improves overall investor satisfaction, which is likely to yield clear financial benefits for investment firms. 

    When satisfaction with investment performance is high, investors are more likely to recommend their advisor and investment firm to others, and also more likely to increase the amount they have invested with the firm. Among highly satisfied investors who indicate their investments have increased, 71 percent say they “definitely will” recommend their primary firm, and they make an average of five recommendations. Among investors with lower levels of satisfaction who indicate an increase in investments, only 30 percent say they “definitely will” recommend, and they make an average of 2.5 recommendations. Further, investors with high levels of investment performance satisfaction indicate they plan to increase their investment amounts at more than double the rate of that among investors with lower levels of satisfaction.

    Investment Firm Rankings

    RBC Wealth Management ranks highest in overall investor satisfaction with a score of 820, and Fidelity Investments ranks second with a score of 810. Edward Jones, which ranked highest in 2012, ranks third in 2013 with a score of 808, compared with 803 in 2012. 

    Drive Higher Perceptions of Performance 

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

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

    About JD Power & Associates

    Headquartered in Westlake Village, Calif., JD Power & 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 & Associates is a business unit of McGraw-Hill Financial.

    About McGraw Hill Financial

    McGraw Hill Financial (NYSE:MHP), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, JD Power & Associates, McGraw Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. 

    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 & Associates.
     

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  • 2013 U.S. Self-Directed Investor Satisfaction Study

    Overall Satisfaction with Self-Directed Investment Firms Decreases, as Communication with Investors Remains a Challenge

    2013-06-17

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    WESTLAKE VILLAGE, Calif.: 17 June 2013 — Overall investor satisfaction with self-directed investment firms decreases from 2012, as investment firms struggle to find the right method and frequency of communicating with investors, according to the JD Power & Associates 2013 U.S. Self-Directed Investor Satisfaction StudySM released today. 
    Key Findings
    • Self-directed investor satisfaction declines to 752 in 2013 from 768 in 2012.
    • Scottrade ranks highest in investor satisfaction with a score of 810.
    • Combining the desired frequency of contact with the preferred method of contact–e.g., email, phone or mail¬–has a positive impact on investor satisfaction.

    The study, now in its 12th year, measures 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 2013 averages 752 (on a 1,000-point scale), down from 768 in 2012.

    Challenges with effective communication are contributing to the decline in satisfaction. Although investment firms are offering more online tools and information for self-directed investors in 2013, the additional content and capabilities may actually make it more difficult to access the functions investors are seeking if a website is not easy to navigate and communication is not clear. For example, overall satisfaction declines by 72 points when website functions are difficult to locate. When investment firms do not communicate frequently enough and do not communicate via investors’ preferred methods, satisfaction declines by 62 points.   
    Further, the study finds that, industry-wide, performance in meeting several key communication-related metrics has declined from 2012, including:
    • The percentage of investors who say they “completely” understand their fee structure has dropped to 35 percent in 2013 from 39 percent in 2012.
    • The proportion of investment firms that have contacted investors two or more times in the past 12 months–the minimum standard–regarding products, services or educational seminars has declined to 34 percent from 39 percent, which impacts multiple aspects of a firm’s relationship with its investors.
    • The incidence of investor awareness/use of at least one financial planning tool has declined to 28 percent from 31 percent.
    “Investment firms miss an important opportunity to keep self-directed investors informed about fees, investor tools and other product offerings by not communicating in the manner and frequency that investors prefer,” said Craig Martin, director of the wealth management practice at JD Power. “Firms need to know how their investors would like to be notified—whether it occurs via email, phone or other means.  It’s important to contact investors proactively and at the appropriate frequency based on investor preference.” 
    The study also finds that the type of information firms are communicating is another important driver of satisfaction. For example, although 55 percent of investors indicate their firm offers investment education seminars to inform them about investment tools, news, guidance and research/analysis, only 7 percent of investors indicate attending one of these seminars. 
    “While, in theory, offering more tools and services may seem to be better, those offerings will have limited value if the features and benefits aren’t applicable to the majority of investors,” said Martin. “Investment firms need to understand the trading behaviors of their investors and provide them with information, tools and other capabilities that will address their highest priority needs. Taking a one-size-fits-all approach is likely to result in fewer investors being satisfied.”  
    For self-directed investors, JD Power offers the following tips:
    • Leverage the tools and resources, such as educational seminars, available from your investment firm to help you research, analyze and invest more prudently.
    • Make sure your investment firm knows your preferred method of contact–e.g., email, phone, or mail–so you will receive all communications in a timely manner.
    • Consider increasing the interaction with your investment firm’s local branch, which is an excellent resource for investment guidance.
    2013 Self-Directed Investor Satisfaction Rankings
    Scottrade ranks highest in self-directed investor satisfaction with a score of 810 and performs highest in the following study factors: interaction; account information; and trading charges and fees. Charles Schwab & Co., Inc. ranks second with a score of 797, followed closely by Vanguard at 795. 
    The 2013 U.S. Self-Directed Investor Satisfaction Study is based on responses from 3,619 investors who make all of their investment decisions without the counsel of an investment advisor. The study was fielded in January and February 2013.
     

    About JD Power

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

    About McGraw Hill Financial

    McGraw Hill Financial (NYSE: MHFI), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, JD Power, McGraw Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.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]  
    John Tews; Troy, Mich.; (248) 680-6218; [email protected] 

    Follow us on Twitter: @JDPower

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

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