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Best Firms for Self-Directed Investors: J.D. Power — 2021

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New customers deluged online brokerage firms last year, opening 10 million accounts, and many encountered problems with websites, processing or trade execution, and account statements, J.D. Power reported Tuesday.

“The significant influx of new investors — and increased trading volumes and overall engagement from clients — clearly put a strain on the system and a spotlight on some of the most critical areas that firms need to address if they want to continue to attract and retain self-service investors,” Michael Foy, senior director and head of wealth intelligence at J.D. Power, said in a statement. 

In the gallery above are the firms ranked above and below average for both DIY investors, or those who make all their financial decisions without an advisor, and those who don’t have an advisor but sometimes seek professional guidance — through a call center, for example. J.D. Power surveyed 4,895 investors falling into these categories.

Customer Satisfaction

The survey found that problems cited by customers doubled in the past year, affecting 11% of do-it-yourself investors and 12% of self-directed investors who sought guidance. 

The most common problems were website issues, processing and trade execution failures, and account statement errors

Among investors who did not experience one or more of these problems, both overall customer loyalty and customer advocacy increased significantly, according to the results. 

The survey also found that when respondents strongly agreed that their brokerage firm provides useful guidance or advice, customer satisfaction scores were 148 points higher on a 1,000-point scale among do-it-yourself investors and 155 points higher among those seeking advice.

Despite this big boost to customer satisfaction, the findings showed that brokerages are not delivering investor education, as fewer than half of self-directed investors said they received useful guidance or advice from their firm.

J.D. Power’s study found that overall customer satisfaction is highest when investors use four or more products with a wealth management firm; these may include services such as investment accounts, banking relationships and mortgages. 

Among do-it-yourself investors, satisfaction scores are 103 points higher when investors use four or more products rather than just one, and 76 points higher among investors seeking guidance. 

Foy noted that it is important for brokerage firms to get the customer satisfaction formula right to distinguish themselves from their competitors. Besides increasing satisfaction, deepening the client relationship is critical for firms needing to generate revenue in a free-trading environment. 

(Image: Adobe Stock)