Canadians are feeling more satisfied with their full service investment firms these days, according to a recent study by global marketing information firm J.D. Power, especially with Mississauga, Ont.-based Edward Jones.
The survey, called the J.D. Power 2014 Canadian Full Service Investor Satisfaction Study, found that overall satisfaction with full service investment firms increased to 755 out of a scale of 1,000 in 2014, up from last year’s score of 737.
Edward Jones received a score of 791 an 18-point increase over its ranking in 2013 and the highest of the 13 full service firms included in the study.
Rounding out the top five are HollisWealth Inc. (790), TD Wealth Private Investment Advice (790), Assante Wealth Management (Canada) Ltd. (774) and BMO Nesbit Burns Inc. (757), all of which are headquartered in Toronto.
Clients are most satisfied with advisors who help them set, track and reach personal investment goals, according to J.D. Power. This is an area many advisors can easily make a difference in their businesses with as only 33% of survey respondents said their advisor met all three key criteria related to goals-based planning: helping to set investment goals, incorporating risk tolerance into the plan and providing insight in the progress toward achieving goals.
Being upfront and clear regarding fees can also go a long way to boosting client satisfaction levels. According to J.D. Power, only 55% of advisors are discussing fees with clients, down from 57% in 2013. However, when advisors talk about their fees with clients their satisfaction level increases by 95 points to 798 from 703.
“It’s something that advisors would be well-served to get out in front of,” says Michael Foy, director, wealth management practice, J.D. Power, in New York. “There’s an awkwardness about discussing fees and people sort of naturally shy away from it but…what our studies really show is that when advisors are proactive about it and make a point to be open about [fees] and engage with clients it strengthens the relationship.”
Looking at satisfaction levels between the different generations, those who are classified as pre-boomer investors (those born before 1946) are happiest with their full service firms giving them a ranking of 870. However, with a ranking of 758, many Gen Y clients think their full-service investment firms leave something to be desired.
Advisors and firms looking to work more closely with the Gen X and Y generations need to focus even more on financial planning aspects of establishing and tracking financial goals together, says Foy. “As a rule [younger investors] tend to be more kind of collaborators,” he says, “compared to the older generation that are more likely to be delegators and be much more hands off in terms of their relationships with their advisors.”
Part of working as a team with this younger demographic will mean changing the way advisors communicate with their clients. For example, according to J.D. Power, Gen X and Gen Y clients prefer to communication by email (33% and 32% respectively) compared to 12% of pre-boomers and 22% of boomers.
The study provides benchmarks of satisfaction that allow Canadian investment firms to compare their performance with others based on seven factors. Those factors, ranked in order of importance, are as follows: investment advisor (39%); investment performance (18%); account information (17%); account offerings (14%); commissions and fees (8%); website (3%); and problem resolution (1%).
The study is based on responses gathered between May and June 2014 from 4,623 investors who use advice-based investment services from financial institutions in Canada.