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Measuring Full-Service Firms, Advisors

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The relationship between investors and their financial advisors becomes the most crucial factor impacting investor satisfaction during times of economic uncertainty, according to the recent J.D. Power and Associates 2009 U.S. Full Service Investor Satisfaction Study.

The study finds that the financial advisor is the most important aspect of overall investor satisfaction, comprising 30 percent in 2009 — an increase from 22 percent in 2008. In contrast, investment performance declines in importance –accounting for only 15 percent of overall satisfaction, compared with 24 percent in 2008.

Edward Jones ranks highest in investor satisfaction with a score of 784 on a 1,000-point scale, performing particularly well in convenience and account statements. LPL Financial Services follows in the rankings with a score of 773, performing well in the financial advisor factor. Charles Schwab & Co. ranks third with 771.

“As investors become increasingly uneasy amid current market conditions, they’re more often looking to their financial advisors for reassurance and guidance,” says David Lo, director of investment services at J.D. Power and Associates. “As investment performance tends to be a relative and subjective measure, it’s more important that the financial advisor manages investors’ expectations of investment performance.”

The study also finds that improved communication by the financial advisor may increase investor satisfaction. In particular, 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.

“Financial advisors need to address uncertainty and apprehension by proactively reaching out to their clients,” adds Lo. “In 2009, 20 percent of investors say they haven’t been contacted enough to review their investment performance, up from 15 percent in 2008. Interestingly, the average number of times investors have been contacted to review their investment performance has not changed from last year.”

The 2009 U.S. Full Service Investor Satisfaction Study, now in its seventh year, measures overall investor satisfaction with full-service investment firms based on six factors (in order of importance): financial advisor; convenience; investment performance; account offerings; account statements; and fees. See

The study is based on responses from nearly 4,500 investors who make some or all of their investment decisions with a financial advisor, and was fielded from March to April 2009.


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