Best & Worst Firms for Self-Directed Investors: J.D. Power, 2024

A lot of do-it-yourself investors these days are wondering what their brokerage firm has done for them lately.

J.D. Power’s newly released 2024 study of self-directed investor satisfaction found that firms are struggling to differentiate and add value for DIY investors as the industry moves deeper into the no-fee future.

What can retail brokerages do? For one thing, they must reconsider the role they play in their clients’ lives and start to deliver clear, quantifiable value, particularly to younger ones, Craig Martin, head of wealth and lending intelligence at J.D. Power, said in a statement.

“The one area where we are seeing increased demand across all categories of investors — even those historically characterized as strictly DIY — is for some level of personalized guidance and support,” Martin said. “Right now, that personal connection is really missing at many firms.”

Stagnation Effects

The study found that overall satisfaction among DIY investors this year stands at 708 (on a 1,000-point scale), up just one point from 2023 and even with 2021.

J.D. Power observed that this lack of improvement amid a strong surge in stock market growth suggests that DIY investor satisfaction has ceased to benefit from the “halo effect” that typically comes with strong markets.

The study identified highs and lows in self-directed investors’ satisfaction. It was highest among those who trade more actively.

It dropped among buy-and-hold investors, which can limit their ability to benefit from the market recovery or adjust their portfolio to take advantage of increased rates from products such as fixed income securities.

This, in turn, could put customer loyalty at risk for firms that cater to less active investors, J.D. Power said.

According to the study, retail brokerages that deliver guidance and advice can benefit from improved DIY investors’ satisfaction.

While satisfaction among self-directed investors is flat in 2024, it improves 15 points among those in the seeking-guidance category, signaling the importance of personalization in driving overall investor satisfaction.

See: Best & Worst Firms for Self-Directed Investors: J.D. Power, 2023

“Trust is going to be a key variable for brokerage firms as they fight to attract growing ranks of millennial and Gen Z do-it-yourself investors,” Kapil Vora, J.D. Power’s senior director of wealth intelligence, said in the statement.

“Right now, trust levels are flat and until firms find ways to better connect with investors, they are going to struggle to forge the strong relationships they need to differentiate and add value beyond just digital prowess.”

See the gallery for the DIY brokerages firms that ranked above and below the industry average for overall satisfaction among self-directed clients and clients seeking advice.

(Image: Shutterstock)