Client satisfaction improves significantly when advisors are transparent about fees, according to the J.D. Power 2014 Canadian Full Service Investor Satisfaction Study.
- Investors want transparency surrounding their fees and portfolio performance. Performance in this area continues to decline, with only 55% of advisors delivering on this metric, compared with 57% in 2013. When advisors explain the firm’s fee structure, satisfaction increases by 95 points to 798 from 703 when the fee structure isn’t explained. Only 32% of investors indicate receiving a benchmark comparison on portfolio performance.
- Only one-third (33%) of investors indicate that their advisor has met all three key criteria related to goals-based planning: helping set investment goals; incorporating risk tolerance into the plan; and providing insight into the progress toward achieving goals.
- Investment advisor satisfaction is highest among pre-boomer investors at 870 (on a 1,000-point scale)—50 points above the industry average of 820—and lowest among Gen Y investors at 758. While age is often a proxy for wealth levels affluent investors in Gen X and Gen Y are also less satisfied than older investors, suggesting firms need to better understand and adapt to the needs and priorities of these younger investors.
- Reaching Gen X and Gen Y investors through the communication channels they prefer and aligning messages with their needs may have a strong impact on future investment firm growth. Email is the preferred channel among Gen X (33%) and Gen Y (32%) investors, compared with pre-boomers (12%) and boomers (22%). Younger investors’ financial goals tend to include funding such major purchases as a home or their children’s education.
- Firms that successfully help advisors develop investor-focused relationships build loyalty, recommendations and increased asset share over time. Among investors of an investor-focused firm, 66% say they “definitely will not” switch to another investment firm; 25% “intend to increase” the amount invested with the primary firm; 59% say they “definitely will” recommend their primary investment firm; and 65% “definitely will” recommend their investment advisor.
Edward Jones ranks highest in investor satisfaction among full service investment firms in Canada, with a score of 791, an 18-point increase from 2013. Edward Jones performs particularly well in four factors: investment advisor; investment performance; account offerings; and commissions and fees. Following in the rankings are HollisWealth (formerly DundeeWealth) and TD Wealth Private Investment Advice (tied at 790 each).
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