"Word of mouth recommendations are essential in the investment industry, as that is the means by which advisors acquire the majority of their investors," said Lubo Li, senior director of the financial services practice at JD Power, Toronto.
"Satisfied investors not only are more likely to recommend their investment firm or advisor to family and friends, but are also more likely to increase their investments with their firm. Firms that deliver the best experience are likely to reap the financial benefits of increased investor retention and improve their chances at attracting new investors."
But a high level of communication alone was not enough to improve investor satisfaction. Advisors who achieved above-average investment performance satisfaction and who had a strong relationship with their investors shared 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.
Full rankings on p.4