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Best Full-Service Investment Firms Ranked by Investors: J.D. Power — 2021

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The pandemic has exposed stark differences in investment behavior between younger and older investors, J.D. Power reported Thursday, and it is incumbent on full-service wealth management firms to customize their services to the evolving needs of younger investors. 

Related: Best Full-Service Wealth Management Firms Ranked by Investors: J.D. Power — 2020

“Investors under age 40 are changing much more quickly in terms of their wealth management preferences and priorities — and they look increasingly different from boomers,” J.D. Power’s senior director of wealth intelligence, Mike Foy, said in a statement. 

Foy noted that the pandemic has accelerated younger investors’ shift to more digital engagement. In addition, they prioritize emerging issues such as environmental, social and governance in their investments more so than boomers.

“Wealth management providers are making a mistake if they assume that the emerging affluent investors will simply evolve into boomers over time,” he said. “Firms with the ability to recognize and address these changing needs will define success through the great wealth transfer.” 

J.D. Power’s report is based on a survey fielded from December through February that received responses from 4,392 investors who make some or all of their investment decisions with a financial advisor. 

Divergent Approaches

The survey found that 55% of full-service investors under 40 prefer digital channels for communicating with their advisors, compared with just 26% of older investors. Seventy-one percent of the former, but only 38% of the latter, have increased their frequency of interaction with their advisory firm during the pandemic.

Engagement by phone increased by 33%, website 25%, email by 24% and mobile apps by 23%.

Younger investors in the survey were twice as likely as older ones to make changes to their investment portfolios, such as increasing or decreasing investments, stopping recurring contributions or making withdrawals. 

ESG has become a key priority but many firms still fall short, J.D. Power found. Among investors under 40 who strongly agree that their advisory firm is committed to ESG efforts, 52% said they plan to increase their investment with that firm. 

The number falls to just 24% among investors over 40. 

Despite ESG’s positive influence on younger investors, 68% said they either have doubts about their firm’s commitment to ESG or do not know about it.

The survey found that one-time fee-for-service and subscription payment models are attractive to younger investors. 

Seventy-four percent of respondents under 40 said they would prefer to pay for full-service wealth management via a one-time fee-for-service model, and 73% supported a subscription model. By contrast, only 42% of full-service investors 40 and older support a fee-for-service model and 34% support a subscription model. 

In the gallery above are the firms ranked above and below average. Across firms, scores are lower than in previous years due to a change in methodology, according to J.D. Power.