To reflect the growing number of self-directed investors seeking guidance, J.D. Power has split its U.S. Self-Directed Investor Satisfaction Study into two groups: those who want to work with registered investment professionals and those who want to invest entirely on their own.
The changes come in the study’s 17th year, and the results, released Thursday, find that those looking for advice are not getting the quality and frequency of proactive contact that they want.
“Lots of folks are … in the middle. They are not self-directed traders nor are they looking for full-service advice,” explained Mike Foy, senior director of the Wealth Management Practice at J.D. Power, in an interview with ThinkAdvisor.
“Many models now provide access to registered professionals via call centers to help them, and they are an increasingly important segment of the market with different needs and priorities [from DIY investors], which is why we split up the survey results,” Foy explained. “They are not the same type of investors, so they should not be treated as such.”
The U.S. Self-Directed Investor Satisfaction Study examines eight factors for those who seek guidance: firm interaction, account information, investment performance, information resources, financial advisor, commissions and fees, product offerings and problem resolution.
The DIY segment’s survey includes seven factors: interaction, account information, commissions and fees, product offerings, information resources, investment performance and problem resolution.
The 2018 study is based on responses from over 5,500 investors who make all their investment decisions without the counsel of a personal financial advisor. The study was fielded in December 2017, with about 2,800 responses coming from those who rely on some guidance and 2,700 from entirely DIY investors.
“As we highlight, there are plenty of concerns and considerations that are common to both groups, such as pricing, account statements and the mobile experience,” Foy said. “These matter to everyone.”
Other key findings of the 2018 study:
- Proactive, client-centric contact drives satisfaction. Investors who seek guidance from their brokerage firms and receive proactive contact are most satisfied than those who have reactive or no contact. Plus, satisfaction for those with only investment-centric discussions is lower than that of those who talk about multiple client-centric topics like personal needs, goals and life changes.
- Reduced trading fees drive advocacy. Satisfaction is much higher among investors who have recognized a decrease in trading fees vs. those who have not.
- Mobile grows but struggles to impress. Mobile use is expanding, with 70% of all self-directed investors saying they use mobile technology for investment activity. In terms of interaction with investment firms, though, the mobile channel earns much lower marks for customer satisfaction than phone and web.
— Check out Best Full-Service Investment Firms Ranked by Investors: J.D. Power — 2018 on ThinkAdvisor.