Clear communication regarding the reasons for investment performance and an explanation of the firm's cost and fee structure were among the most important facets in overall investor satisfaction.
Despite an overall increase in satisfaction with investment firms, the study found that fewer advisors were talking to their investors about fees – 57% of investors indicated that their advisor explained their fee structure, down from 63% in 2012. However, investor satisfaction improves an average of 99 points when advisors discussed their firm's fee structure.
"Taking the time to explain the fees that firms charge helps ensure investors fully understand the value proposition of working with an advisor – they see what costs are associated with the relationship and the benefits they are getting for the fees that are charged," said Martin. "Being transparent about fees is an essential part of a healthy relationship and is something that all advisors should be talking about with their investors."
An investor's experience is closely linked to the bottom line of their firm, as that experience impacts loyalty, advocacy and share of wallet. While 72% of highly satisfied investors – those with satisfaction scores of 900 and above – said they "definitely will" recommend their firm to others, only 29% of investors with medium satisfaction – between 700 and 899 – and 4% of investors who have low satisfaction (below 700) said the same.
Additionally, 27% of highly satisfied investors said they would increase the amount invested with their primary firm during the next 12 months, compared with only 17% of investors with low satisfaction.
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