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Cerulli Report: Firm Reputation, Trust Playing Larger Role in Investor Satisfaction

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Trust and reputation are playing an increasing role in driving the satisfaction of investors with their primary provider, according to a new report.

Cerulli Associates, Boston, Mass., published this finding in the June issue of the “Cerulli Edge: U.S. Asset Management Edition.”  The report examines the marketing strategies of investment advisory firms–including regional broker-dealers, subadvisory firms and participants in retirement plans–how investors perceive these firms in the market place.  

In 2011, 19.4% of households polled cited reputation and trust as a reason for satisfaction with their provider. This compares with 14.7% of respondents in 2010.

Although reputational issues rank fourth among investors’ reasons for choosing a primary provider of investment services, perceptional issues, such as quality of service and referrals, rank equally high, according to the report. Ten percent of all households polled flagged reputation as the reason for choosing a primary provider.

Only four other reasons ranked higher. Among them: “Someone else chose for me”   (14% of households), which in most cases was the company retirement plan; referral from a trusted source (13%); and quality of service (12%).

Satisfaction with products, including interest rates, features, benefits and credit limits/lines, was the only other factor that is also playing a larger role in fueling investor satisfaction. Among all respondents, 8.8% in 2011 cited this as a reason, as compared to 8.2% in 2010.

The report further notes that regional broker-dealers claim three of the top five positions–including the top spot–in financial advisor satisfaction. The companies earning these laurels include Edward Jones, with a top advisor score of 901; Raymond James & Associates, with a 4th place score of 864; and RBC Wealth Management, with a 7th place score of 802.

Investors who name “other full-service broker-dealers as their primary provider–a channel that is largely composed of regional B-Ds–are mostly likely to be satisfied, the report says. 

Seventy-four percent of respondents express satisfaction with their full-service B-D. This compares with satisfaction rates of 63% and 58%, respectively, among respondents who identify private-client firms and wirehouses as their primary provider. 


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