J.D. Power and Associates Reports: Key Areas of Full Service Investor Satisfaction Continue to Lag Pre-Recession Levels

WESTLAKE VILLAGE, Calif., May 10, 2012 /PRNewswire/ -- While overall investor satisfaction with full service investment firms has nearly stabilized at pre-recession levels, satisfaction continues to decline in the most critical factors that drive overall satisfaction, according to the J.D. Power and Associates 2012 U.S. Full Service Investor Satisfaction Study(SM) released today.

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The study, now in its 10th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): investment advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution.

The study finds that overall satisfaction has improved to 775 on a 1,000-point scale, up from 772 in 2011, but down 1 index point from the 2008 study (776). Overall investor satisfaction declined to a low of 731 in 2009.

"On the surface, some measures of satisfaction would suggest everything is back to normal, but that is not the case," said David Lo, director of investment services at J.D. Power and Associates. "On a cautionary note, satisfaction has declined in the three most critical factors."

Satisfaction is lower in 2012 than in 2008 with the three factors that are most critical to customer satisfaction -- financial advisor, investment performance and commissions and fees. Despite lower scores in three factors -- financial advisor (854 vs. 867 in 2008), investment performance (699 vs. 737 in 2008) and commissions and fees (636 vs. 700 in 2008) -- the incidence of investor contact has increased in 2012. For example, the average number of contacts from the advisor regarding portfolio/asset allocation has increased to 3.2 per year, up from 2.3 in 2008, while the average number of annual calls from the advisor regarding investment performance has increased to 3.3 this year from 2.2 in 2008.

"Advisor contact levels have not declined. In fact, the frequency of proactive outreach regarding investors' portfolio and investment performance has increased slightly," said Lo. "What's happening is that investor expectations have increased, due in part to the recovery period we're in, but also due to increased transparency driven by social media having become more of a mainstream communication platform."

Among firms included in the study, Edward Jones ranks highest in investor satisfaction with a score of 803 and performs particularly well in the investment advisor and account information factors. Investors with Edward Jones are also highly satisfied with their advisor returning calls within one business day and in developing a collaborative relationship.  Fidelity Investments ranks second with a score of 800, followed by Charles Schwab & Co., Inc. at 787.

Social Media Drives Transparency for Investors

Lo said investor expectations are increasing -- driven by transparency created by the Web and their use of social media -- which is putting added pressure on investment firms. 

"This is a bad news-good news situation for investment firms," said Lo. "The bad news is that investment firms have to work harder to satisfy their investors.  The good news is that the firms that work harder are able to differentiate themselves, and positive sentiment on social media will help them do that."

At the same time, this creates a win-win situation for investors, who have access to more information than ever before. "Due to significant increases in the adoption and usage of social media outlets, investors have the ability to share their experiences, strategies developed with their advisor, and even fee information in a far-reaching and real-time forum," said Lo.

Research conducted by J.D. Power's Consumer Insight and Strategy Group(1)  to track social media activity finds that:

• The most common theme of discussions among investors is trust in their advisor or broker
• Lack of trust prompts investors to search for a new investment firm
• Potential investors use social media to seek advice from others to find a trustworthy firm or broker
• Investors typically share advice they receive from their investment firm with others, usually with the intent of validating their financial plan
• Investors are increasingly sensitive to fees and costs, and use social media as a means to compare their firm's fees with those charged to others who discuss the issue online

The 2012 U.S. Full Service Investor Satisfaction Study is based on responses from more than 4,400 investors who make some or all of their investment decisions with an investment advisor. The study was fielded in February 2012.

Things to Consider When Selecting an Investment Firm

For consumers who are considering a full service investment firm, J.D. Power and Associates offers the following tips:

• Shop around to compare firms, and pay close attention to how they will manage your account and how they charge commissions and fees.
• Use the Web to see what others are saying about investment firms. Look at both the negative and the positive comments posted on social media sites to get a balanced perspective.
• Consider your investment needs and look for a firm that is best suited to meet them. Some firms specialize in more sophisticated financial planning that caters to investors with a lot of money to invest, while others appeal to more mainstream investors. 
• Develop a list of questions and ask the advisor those questions before signing an agreement. If you're not comfortable with the answers, it's likely you won't be happy with the advisor, so keep looking.

Included in the study but not ranked due to small sample size are: Oppenheimer Funds and Northwestern Mutual.

Power Circle Ratings Legend:
5 – Among the best
4 – Better than most
3 – About average
2 – The rest

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company providing forecasting, performance improvement, social media and customer satisfaction insights and solutions.  The company's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

McGraw-Hill announced on September 12, 2011, its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.

Media Relations Contacts

Jeff Perlman; Brandware Public Relations; Woodland Hills, Calif.; (818) 598-1115; [email protected]   
John Tews, J.D. Power and Associates; Troy, Mich.; (248) 680-6218; [email protected]

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate

(1) Full service investor social media research includes information gathered online from May 2011 through April 2012, which consisted of more than 5,000 online communications across various social media.

SOURCE J.D. Power and Associates

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