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How 'Customer-Driven' are Wall Street Firms?

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David Lo, director of investment services at J.D. Power and Associates, in Westlake Village, California, there has been an “improvement in overall satisfaction,” for full-service brokerage clients who participated in the eighth annual U.S. Full Service Investor Satisfaction Study. But the study also found that, “an increasing proportion of investors in 2010 indicate they believe their investment firm is driven by profits, rather than focused on customers, compared with 2009.”

The overall sentiment gain, from an average score of 731 in 2009, to 769 in 2010, is due large part to investors’ happiness with their advisor and their “investment performance.” But, “account information; account offerings; commissions and fees; website; and problem resolution,” are all factored into the score investors give for their firm.

“Communicating reasons for investment performance has a considerably strong impact on satisfaction,” the release stated. Customers who received this investment performance update gave their brokers much higher average scores–809 out of 1000–versus an average 655 score for those who did not receive these details. Practices such as “engaged client/advisor relationships that involve the development of an investment strategy; periodic review of investment objectives; regular communication around and reasons for investment performance; and a clear explanation of fees and commissions,” may boost overall satisfaction, according to the announcement.

The “range of scores has narrowed,” Lo told, between the highest average score of 794 at Edward Jones, and the lowest, 739 at Chase Investment Services/WaMu investments. “This suggests that service practices [have become] more even at the larger firms,” he explains.

RBS Wealth Management also scored near the top, at 793, with LPL Financial right behind at 791.

The study surveyed “4,460 investors who make some or all of their investment decisions with an” intermediary participated in the study, conducted in May, according to the announcement.

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.


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