J.D. Power Broker Survey: Investor Satisfaction Up, Wirehouse Scores Stay Low

RBC Wealth Management ranks highest, followed by Charles Schwab and Fidelity

The latest J.D. Power and Associates' survey of investors with full-service brokerage firms found that RBC Wealth Management ranks highest, the group said Thursday. RBC has an investor-satisfaction score of 814 on a 1,000-point scale, while Charles Schwab is second with 805. Fidelity Investments ranks third with a score of 796.

The average score for the industry is 772, up from 769 last year. Among the wirehouse firms, only UBS tops this satisfaction level. Merrill Lynch, Morgan Stanley Smith Barney and Wells Fargo Advisors fall below it, as they did in 2010.

J.D. Power says the study, now in its ninth year, measures overall investor satisfaction with full-service firms in seven areas: investment advisor, investment performance, account information, account offerings, commissions and fees, website and problem resolution. The results were based on responses collected in March from more than 4,200 investors.

“RBC should be quite proud,” said Chip Roame (left), head of Tiburon Strategic Advisors, in an interview. “Having acquired and assimilated several firms seems to have worked for the firm. For two years in a row, it’s been in the top two.”

"The performance of 'discounters' Schwab and Fidelity  is also impressive,” Roame said. Schwab moved from the fourth-best performance in 2010 to the second-best performance, while Fidelity improved from the seventh-best result last year to the third-best spot.

“Competition is heating up with higher scores -- or happier investors!” the consultant added.  

The study also finds that online communication has increased: Nearly 60% of full-service investors have visited their firm’s website in the past 12 months, up from 52% in 2009, and more than 50% have exchanged an email with their advisor in 2011 vs. 19% in 2008.

Proactive outreach from advisors goes a long way in developing the client-advisor relationship, and expectations as far as frequency of contact have increased coming out of the recession,” said David Lo (left), director of investment services at J.D. Power, in a news release. “Advisors can meet this increased need by utilizing more non-traditional forms of communication, such as email and the firm’s website, which is much more widely accepted by full-service investors of all ages.”

Wirehouse Woes

The wirehouses’ poor performance, one expert says, may reflect differences in the service that clients receive from advisors and teams.

“In general, clients’ responses largely depend on who their advisors are,” said Mark Elzweig (left), an executive search consultant, in an interview. “There is a great disparity in resources and access to home-office staff between lower-producing individual brokers and $2-million teams.”  

In general, Elzweig adds, such surveys don’t reveal much about what makes certain broker-dealers (and their advisors) stand out from the others. "I personally don't find surveys like this, that paint all advisors at a firm with the same broad brush, to be very informative or useful," he said. 

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