Investors keeping their options open

By Vikram Barhat | June 15, 2010 | Last updated on June 15, 2010
2 min read

An increasing number of Canadian investors prefer not to limit their investments with just one firm, despite showing a marked increase in overall satisfaction with the quality of services received.

According to a report by J.D. Power and Associates, investor satisfaction has increased considerably from 2009 as the market recovered, but investors are exercising caution by diversifying their portfolios among more investment firms.

“As the economy recovers, investors are taking a more cautious approach, and are exploring their investment choices and using more firms to manage their assets, rather than keeping all their eggs in one basket,” said Lubo Li, senior director and leader of the financial services practice at J.D. Power and Associates, Toronto.

“As the industry provides investors with more choices, the marketplace has become more competitive and clients have become more demanding,” Li continued. “Understanding and meeting investor needs and expectations is key to ensuring loyalty.”

The study that provides benchmarks for investor satisfaction finds that overall satisfaction with full service investment firms averages 735 on a 1,000-point scale, up by 42 points since last year.

This, however, seems to have come at the cost of loyalty, as only 14% of investors expressed strong loyalty to their primary firm, compared with 21% in 2009. Similarly, the study shows that only 13% of investors are strongly committed to their primary firm, down from 20% in 2009. In addition, the percentage of investments held with an investor’s primary firm fell to 78%, on average, slightly lower than 81% in 2009.

The evaluation uses seven parameters to gauge overall investor satisfaction with full-service investment firms and financial institutions. These include investment advisor, account offerings, investment performance, account information, fees, website, and problem resolution.

Signs of Canadian economic recovery notwithstanding, fewer investors (53%) believe that Canada is out of the recession, while 55% said the same in 2009. Similarly, 43% percent believe that the Canadian stock market has bottomed out, compared with 58% in 2009.

For the second consecutive year Raymond James Ltd. ranked highest in investor satisfaction among full-service investment firms, with a score of 759. RBC Dominion Securities followed in the rankings, with a score of 744, while Edward Jones took the third spot with a score of 743.

“Investor satisfaction among bank-affiliated brokerage firms has improved substantially, with particular improvements in the areas of investment advisor and account information,” said Li. “These improvements indicate that bank-based firms are taking advantage of their financial strengths and existing relationships with clients to enhance the overall experience at the enterprise level.”


Vikram Barhat