J.D. Power’s latest survey of investors working with financial advisors shows their overall level of satisfaction is unchanged from last year at 807 on a 1–1,000 scale, weakening among several of the top-rated broker-dealers. Given investor concerns with retirement income and what they can leave to their children, both advisors and firms need to step up and strengthen their ties to clients, the research firm says.
“With an aging full-service investor demographic and an anticipated enormous generational transfer of wealth on the horizon, investment firms are not asking the right questions of their clients and may be at risk of losing assets if they fail to establish relationships now with the next generation,” J.D. Power said in a statement about its 2015 U.S. Full Service Investor Satisfaction Study, in early April.
The survey, which included the views of about 5,300 investors, finds that 71% of investors want to talk about their wealth transfer plans and needs with their full-service advisors, but just 42% have been asked by their advisors to engage in such discussions. Investor satisfaction is higher among those asked by their FAs about next-generation issues, 854, than those who are not asked, 793.
Job to Do: Collaborate
“Think about the individual-investor demographic,” said Mike Foy, director of J.D. Power’s wealth management practice, in an interview. “The average age of investors in our study is 61, and others studies are similar.”
The wealth transfer “is looming on the horizon” for these clients, Foy says. When they are asked about this issue, satisfaction with their advisor relationship “tends to increase,” he adds.
Such discussions are a key in driving the relationship forward and in building asset growth with the next generation. “When it comes to raising the issue and bringing this up in conversations, advisors should be doing more.”
Boosting communication skills is critical for improving relationships with female clients, as well, and it may be more important than having them speak with female advisors, according to Foy.
“What we saw in the research is that having a woman advisor is not necessarily having the [greatest] impact on women [client] experiences. The most critical factor that women put a high value on is having a relationship based on trust,” he explained. “It means having an advisor who has the client’s long-term interest in mind and is working in concert” with these investors.
In addition, advisors need to reach out to spouses much more consistently. The study finds that 23% of investors work with advisors who do not interact with their spouse or partner. This means the FAs are “missing a tremendous opportunity to retain the household wealth over the long term,” the research group points out.
Now in its 13th year, the J.D. Power study aims to measure investor satisfaction with full-service investment firms by looking at how clients feel about their advisor, investment performance, account information, account offerings, commissions and fees, website and problem resolution.