Best Full-Service Investment Firms Ranked by Investors: J.D. Power—2013

As expected, portfolio performance and communication are critical factors in how broker-dealers and their advisors are rated

Thanks to the strong uptick in the markets and other factors, investor satisfaction with full-service investment firms improved for the second year in a row, J.D. Power & Associates said early Thursday.

“Logically, an improvement in investment performance is going to result in an increase in investor satisfaction,” said Craig Martin, director of investment services at J.D. Power, in a press release. “However, not all firms achieve the same level of increase in satisfaction from this improvement.”

Overall investor satisfaction moved up 2% from last year, or 14 points, to 789 on a 1,000-point scale. Most of the 15 broker-dealers listed in the survey results showed improvement from 2012.

Still, the satisfaction scores of some BDs is “lower than might be expected based on reported performance alone,” according to J.D. Power.

The satisfaction scores reflect seven factors (in order of importance): investment advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution. More than 4,750 investors were polled in January and February for the survey.

The investor research finds that two elements are most crucial when it comes to satisfaction levels: the person that investors credit for their investment performance and the relationship investors have with their advisor.

“In the 2013 study, the firms with the highest satisfaction scores contacted investors more than 12 times during the past year, while those with lower scores only contacted investors approximately six to eight times,” Martin said. “However, firms should also understand how their investors prefer to be contacted. Some investors want regular updates via email, some prefer a phone call or an in-person conversation, while others prefer a combination of all three channels.”

Communication is also crucial, he notes.

“Being absolutely transparent with investors about the performance of their portfolio, whether performance is good or bad, is absolutely critical for investment firms,” Martin added. “Beyond that, investors want communication that is meaningful, not just checking in once a month, but also providing insights, such as stocks to watch, tips for tax savings—things that add value.”

The majority of highly satisfied investors, 71%, who say their portfolios have improved, indicate that they “definitely will” recommend their primary BD, noting they make an average of five recommendations.

Of investors with lower satisfaction levels, just 30% say they “definitely will” recommend their advisor, and they make an average of 2.5 recommendations.

Some firms, such as Morgan Stanley, dispute the significance of the results overall. Instead, they rely on their own client surveys, which are conducted through outside research groups.

In Morgan Stanley’s case, a 2013 poll of clients with $500,000 to $5,000,000 in assets found a 95% satisfaction rate with the firm and a 96% satisfaction level with the firm’s advisors.

J.D. Power says its survey results come from both investors with a net worth of more than $500,000, 33%, and those with a net worth of less than that amount, 67%.

(See 2013 J.D. Power survey results on next page.)

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(Also check out last year’s survey on AdvisorOne: Best Full-Service Investment Firms Ranked by Investors: J.D. Power—2012.)

Full-Service Investment Firm Rankings: 2013

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J.D. Power 2013 Full-Service Investment Survey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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