Relationship with Adviser Drives Investor Firm Satisfaction

The financial adviser is the most important aspect of overall investor satisfaction with full service investment firms, comprising 30% in 2009—an increase from 22% in 2008, a new study says.

The J.D. Power and Associates 2009 U.S. Full Service Investor Satisfaction Study found that in the midst of economic uncertainty, the relationship between investors and their financial advisers becomes the most crucial factor impacting investor satisfaction. Improved communication by the financial adviser, particularly proactively contacting investors to set or refresh a comprehensive financial plan, thoroughly explaining fees and providing clear explanations regarding the reasons for investment performance, may have a substantial positive impact on satisfaction, the company said.

While the relationship with an adviser took on more importance, the study found that investment performance declined in importance—accounting for only 15% of overall satisfaction, compared with 24% in 2008.

“As investors become increasingly uneasy amid current market conditions, they’re more often looking to their financial advisers for reassurance and guidance,” said David Lo, director of investment services at J.D. Power and Associates, in a press release. “Financial advisers need to address uncertainty and apprehension by proactively reaching out to their clients. In 2009, 20% of investors say they haven’t been contacted enough to review their investment performance, up from 15% in 2008. Interestingly, the average number of times investors have been contacted to review their investment performance has not changed from last year.”

Firm Ratings

The study assigned firms customer satisfaction ratings. Edward Jones ranked highest in investor satisfaction with a score of 784 on a 1,000-point scale, and J.D. Power said it performed particularly well in convenience and account statements. The industry average was 731.

The overall firm customer satisfaction index ratings were (including their index scores, based on a 1,000-point scale):

1. Edward Jones (784)
2. LPL Financial Services (773)
3. Charles Schwab & Co. (771)
4. Raymond James (758)
5. Ameriprise Financial (754)
6. UBS Financial Services (750)
7. Smith Barney (736)
8. Chase Investment Services (733)
9. Morgan Stanley (722)
10. Fidelity Investments (721)
11. Wachovia Securities (721)
12. Wells Fargo Investments (708)
13. Merrill Lynch (707)
14. Banc of America (700)

(Included in the study but not ranked, J.D. Power said, due to small sample size, are ING Direct, Oppenheimer Funds, RBC Wealth Management, Robert W. Baird & Co., T. Rowe Price, Vanguard and WaMu Investments.)

"Top-performing firms that have consistently sustained high levels of investor satisfaction during the past three years have been among the few to grow or maintain their average assets under management per investor," said Lo. "It's no coincidence that firms with lower levels of satisfaction have experienced a decline in their average assets under management, which further highlights the relationship between delivering a superior experience for investors and improving the bottom line."

The 2009 U.S. Full Service Investor Satisfaction Study measures overall investor satisfaction with full service investment firms based on six factors (in order of importance): financial adviser; convenience; investment performance; account offerings; account statements; and fees. The study is based on responses from nearly 4,500 investors who make some or all of their investment decisions with a financial adviser, and was fielded from March to April 2009.

For more information, visit JDPower.com.