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High commitment means high yield

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Highly satisfied clients use more services and give more of their money to their investment firm, according to the latest “Full Service Investor Satisfaction Study” from J.D. Power and Associates.

And despite the ready availability of online investment tools, the percentage of investors who made investment decisions under the guidance of a financial advisor increased over 2006′s figure, up to 59 percent from 53 percent. The study also ranked the investment firms that ranked highest with consumers.

On a 1,000-point scale, Edward Jones ranked highest for the third consecutive year, at 802. A.G. Edwards & Sons was second, with Vanguard coming in third.

Investors who regularly seek counsel from their advisor — when compared to those who call themselves self-directed — rank their satisfaction with the firm, financial advisor and the performance of the investment portfolio an average of 90 index points higher. What J.D. Power found is that satisfied investors need to be turned into highly committed clients if firms want to realize substantial cost-saving and revenue-generating benefits. The study found only 37 percent of investors consider themselves highly committed to an investment firm, while 52 percent said they have a medium commitment.

“The benefits of moving an investor from medium to high commitment speak volumes when examining the return on investment,” says David Lo, director of investment services at J.D. Power and Associates. “For a firm with 1 million customers, shifting a modest 5 percent of investors from moderate to high levels of commitment can result in an increase of more than $5 billion in assets under management.”

Dedicating advisor time and attention can help enhance satisfaction and commitment among these extremely valuable, yet vulnerable, investors, Lo says.

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