Good Investment Performances Equals Investor Satisfaction

The current economy has led investors to look more closely at investor performance as a key element to their satisfaction, according to a release of survey results from J.D. Power and Associates, a global marketing information firm. This year, investment performance surpassed financial adviser/broker as the most important factor, accounting for 24% of overall satisfaction, compared with 19% in 2007. Financial adviser/broker accounts for 22% of overall satisfaction, down slightly from 24% in 2007.

However, overall satisfaction is substantially lower among the 12% of investors who report they do not have a financial adviser or team assigned to them.

The study measured overall investor satisfaction with full-service investment firms based on six factors (in order of importance): investment performance; financial adviser/broker; commissions and fees; account setup/account offerings; convenience; and account statements. The study also measures investor satisfaction within three investor portfolio types: affluent investors ($1 million or more in investable assets); mass affluent investors (between $100,000 and $999,999 in investable assets); and mass market investors (less than $100,000 in investable assets).

Raymond James ranks highest in investor satisfaction with a score of 831 on a 1,000-point scale, receiving high ratings from investors in all six factors and performing particularly well in proactively contacting investors. Edward Jones follows in the rankings with a score of 806, and UBS Financial Services ranks third overall with 798, according to the release. The full scores are available here.

Improving Satisfaction

J.D. Power and Associates said advisers can improve client satisfaction by keeping up with periodic contact with investors, whose varying asset levels require different levels of contact frequency. According the study results, to achieve similar levels of high satisfaction among the three investor segments, investment firms need to proactively contact affluent investors an average of 4.2 times per year, mass affluent 2.8 times, and mass market 1.7 times.

“Current economic conditions, as reflected in declines in stock market indices, have heightened investor awareness of portfolio performance,” said David Lo, director of investment services at J.D. Power and Associates, in the release. “Regardless of market conditions, advisers who succeed at managing the expectations of their investors can help to mitigate some of the negative effects. For instance, keeping investors informed by conducting regular portfolio reviews and including portfolio performance information on account statements can have a considerable impact on satisfaction.”

The 2008 Full Service Investor Satisfaction Study, conducted in April and May, is based on responses from 4,528 investors who primarily invest with one of the 19 firms included in the study.