May 10, 2012

Best Full-Service Investment Firms Ranked by Investors: J.D. Power—2012

Satisfaction with the major firms in 2012 is at pre-crisis levels of 2008, but it is down when measuring several critical factors, the poll found

According to J.D. Power & Associates, which released its 2012 U.S. Full-Service Investor Satisfaction Study on Thursday, overall investor satisfaction with the major investment firms has nearly stabilized at pre-crisis levels. Yet, satisfaction continues to decline in the most critical factors that drive overall satisfaction, according to research group.

"On the surface, some measures of satisfaction would suggest everything is back to normal, but that is not the case," said David Lo (right), director of investment services at J.D. Power and Associates, in a press release. "On a cautionary note, satisfaction has declined in the three most critical factors."

JD Power's David LoThe study, now in its 10th year, measures overall investor satisfaction based on a survey of some 4,400 individuals in February 2012. It then gives the major full-service investment firms an overall score between 1 and 1,000, based on how the investment firms performed in seven factors: investment/financial advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution.

This year’s study finds that overall satisfaction has improved to 775 on a 1,000-point scale, up from 772 in 2011, but down 1 percentage point from the 2008 study (776). Overall investor satisfaction declined to a low of to 731 in 2009. In March, J.D. Power released the rankings of advisor firms as ranked by the advisors themselves.

Satisfaction is lower in 2012 than in 2008 with the three factors that are most critical to customer satisfaction: financial advisor, investment performance and commissions and fees.

Despite lower scores in three factors—financial advisor (854 vs. 867 in 2008), investment performance (699 vs. 737 in 2008) and commissions and fees (636 vs. 700 in 2008)—the incidence of investor contact with advisors has increased in 2012. For example, the average number of contacts from the advisor regarding portfolio/asset allocation has increased to 3.2 per year, up from 2.3 in 2008, while the average number of annual calls from the advisor regarding investment performance has increased to 3.3 this year from 2.2 last year.

"Advisor contact levels have not declined. In fact, the frequency of proactive outreach regarding investors' portfolio and investment performance has increased slightly," added Lo. "What's happening is that investor expectations have increased, due in part to the recovery period we're in, but also due to increased transparency driven by social media having become more of a mainstream communication platform."

(Find out what the Best Advisor Firms Ranked by Advisors for 2012 were on AdvisorOne.)

Full-Service Investment Firm Rankings

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Find out what the Best Advisor Firms Ranked by Advisors for 2012 were at AdvisorOne.

Read about J.D. Power’s previous advisor firm rankings from 2010 at AdvisorOne.

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