Just one week after Charles Schwab said it was rolling out a $30-a-month digital-advice platform that includes access to financial advisors, J.D. Power has released its 2019 U.S. Self-Directed Investor Satisfaction Study — which shows clients seeking some professional guidance continue to be more satisfied on average than clients who do not.
Overall, platforms that serve both pure do-it-yourself investors and those self-directed investors who also seek professional input saw their satisfaction levels — measured on a 1-1,000 scale — drop slightly from a year ago.
However, those platforms with access to financial professionals topped the pure DIY platforms by an average of 23 points this year: 791 vs. 768. That spread in satisfaction is greater than what it was in 2018: 795 vs. 775.
Among millennials, there is a strong interest in both digital tools and financial guidance, J.D. Power says. More than half, 61%, of millennials are interest in digital-based advice versus less than a third, 28%, of baby boomers. For DIY investors, 51% of millennials express interest in digital-based advice versus 23% of boomers.
“What separates millennial investors from previous generations is not just greater mobile usage; they’re actually approaching investing in a fundamentally different way,” according to Michael Foy, senior director of Wealth & Lending Intelligence at J.D. Power.
“For example, they are much more oriented to setting and working toward investment goals, and much less likely to believe that they can outperform markets with individual stock picking,” Foy explained. “The customer experience that firms deliver needs to reflect this evolution in priorities to build loyalty with this critical segment.”
The survey also found that millennials have lower levels of overall satisfaction with their investment firm than boomers do. For clients seeking some professional guidance, 22% of millennials say they may or definitely will switch firms over the coming 12 months versus only 6% of boomers. Among DIY investors, 11% of millennials are looking to move firms vs. just 6% of boomers.
The survey also finds that millennials in both segments have lower levels of brand trust and referral potential.
In terms of product preferences, millennials are more likely to embrace exchange-traded funds and other passive instruments over individual stocks. Even among DIYers, roughly a third, 34%, of millennials — versus 50% of boomers — try to beat the market by making their own decisions on individual stocks.
Plus, 83% of millennials have investment goals versus 74% of boomers.
J.D. Power’s 2019 results are based on responses from nearly 5,420 investors who make their own investment decisions; responses were collected from November 2018 through January 2019.
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