Though investors are giving full-service broker-dealers higher marks than a year ago, many are likely to stop working with their advisors, according to the J.D. Power’s 2017 U.S. Full Service Investor Satisfaction Study.
(Check out last year’s rankings.)
Close to half of emerging-affluent investors — which the research firm defines as millennials with $100,000 or more of investable assets — say they “probably will” or “definitely will” stop working with their current broker-dealer vs. less than 10% of investors in other generations.
This planned movement of assets appears to reflect the do-it-yourself preference of younger investors and the growing appeal of low-priced technology-based options.
“With the emergence of robo-advisors and self-directed platforms, investors have more options than ever, both within and outside the traditional full-service channel,” said Mike Foy, director of the wealth management practice at J.D. Power, in a statement.
Emerging-affluent millennials, who own about 8% of the overall available investable asset pool, account for 55% of assets currently at risk of being moved away from their current investment firm, according to the survey.
“Wealth managers have been slow to focus on millennials because they don’t yet have the assets boomers do. But when looking at potential money in motion — even in the short term — the picture looks quite different,” Foy explained.
One-fourth (25%) of full-service millennial investors say they have tried or are currently using a robo-advisor. Nearly one-third rate their satisfaction with this platform higher than that experienced with their full-service firm.
The survey finds that just 54% of full-service investors have a documented financial plan.
Though these plans address retirement planning, investors indicate that other financial goals that are a higher priority (such as a home purchase or education planning for millennials or capital preservation and/or estate planning for boomers) are not being adequately addressed.
For advisors that do establish good relations with millennials, there could be more referrals.
Among clients identified as highly likely to recommend their advisors, millennials made more positive recommendations during the past 12 months (an average of about eight per client) than did boomers (three per client) and Gen X (four per client) combined.
Plus, millennials say they are more likely to give referrals if their advisor asks (40%) or if they are given incentives to do so (39%).
Here are the rankings of full-service firms above and below the industry average, according to J.D. Power:
Firms Above (or At) the Industry Average
Firms Below the Industry Average
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