Canada’s Big Six didn’t crack the top-three in JD Power’s investor satisfaction survey. But overall satisfaction with the full-service investment firms increased – especially among investors who were given a transparent account of fees.
Overall investor satisfaction with full service investment firms in Canada improves to 737, up 17 points from 2012. Satisfaction improved an average of 99 points when advisors discuss fees with their investors. Nearly three-fourths, 72%, of highly satisfied investors indicate they will recommend their investment firm to others.
Improved market performance, coupled with effective advisor communication with their clients, help drive an increase in overall investor satisfaction with full service investment firms in Canada, according to the J.D. Power 2013 Canadian Full Service Investor Satisfaction StudySM released today.
The study provides benchmarks for satisfaction that allow individual investment firms in Canada to compare their performance with other firms. Overall investor satisfaction with full service investment firms and financial institutions that offer wealth management and private banking services is measured in seven factors: investment advisor (38%); investment performance (18%); account information (17%); account offerings (14%); commissions and fees (8%); website (2%); and problem resolution (2%).
Overall satisfaction improved to 737 on a 1,000-point scale, up from 720 in 2012. The study found a strong correlation between investor satisfaction and actual market performance, with only 8% of investors indicating a decrease in their portfolio performance in 2013, down from 29% in 2012.
"Investment performance certainly helps drive an increase in overall satisfaction, but the advisor still plays a key role," said Craig Martin, director of investment services at J.D. Power. "Even when the market is strong, advisors need to ensure their clients understand the reasons for their portfolio performance, explain costs and fees and manage expectations regarding risk. Relying too heavily on financial performance alone to drive investor satisfaction may have a number of pitfalls."
According to the study, investors are not only looking for good returns, they are also are seeking reassurance that they are making the right investment decisions. Overall satisfaction among investors who indicate their advisor clearly communicated reasons for investment performance was 145 points higher than among those who indicated the converse.
Additionally, when advisors discussed and effectively incorporated risk tolerance as part of their reviews with investors, there was a significant 109-point lift in overall satisfaction. Investors want more than just strong investment performance; they want to understand the reasons behind this performance.
Firms with higher satisfaction scores ensured that investors feet involved in—and to an extent responsible for—their investment performance. Stronger relationships between advisors and investors allowed these firms to positively influence investor perceptions of success.
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