J.D. Power today released its 2021 rankings of full-service investment firms, with Edward Jones topping the rankings with an overall customer satisfaction index score of 770 (on a 1,000-point scale), 10 points better than second-ranked Stifel.
Fidelity, RBC and UBS tied for third with 751 points, followed by Ameriprise (746), Morgan Stanley (744), LPL (740), J.P. Morgan Wealth Management (738) and Charles Schwab (735) rounding out the top 10.
The study, released annually since 2002, measures overall investor satisfaction with 24 full-service investment firms based on seven factors including product offerings; problem resolution; convenience; digital experience; financial advisors; value; and trust.
Edward Jones’ 770 in overall satisfaction was 38 points over the industry average. A deeper dive indicates that Edward Jones also scored highest in trust; convenience; and problem resolution.
“We are incredibly honored to be named by investors as delivering the highest level of satisfaction, especially during a year of challenge and volatility,” said Edward Jones Managing Partner Penny Pennington. “We are constantly looking for ways to improve our service experience and deepen relationships as we live our purpose—improving the lives of our clients and colleagues and, together, benefiting our communities and society.”
In recent years, Edward Jones also ranked highest in investor satisfaction by J.D. Power in 2019 and 2015 (tied).
Younger investors diverging from Boomers
In a broader sense, this year’s J.D. Power investor satisfaction study also found full-service wealth management firms have a vested interest in tailoring their services to the evolving needs of younger investors—particularly with Millennials poised to inherit more than $68 trillion in wealth from their Boomer parents during the next decade.
The past year has exposed a stark divergence in the investment behavior of younger investors compared with their older counterparts.
“Investors under age 40 are changing much more quickly in terms of their wealth management preferences and priorities—and they look increasingly different from Boomers,” said Mike Foy, senior director of wealth intelligence at J.D. Power. “Not only has the pandemic significantly accelerated their shift to more digital engagement, but emerging issues like ESG [environmental, social and governance] are also a major priority for them that isn’t seen as much yet among Boomers. Wealth management providers are making a mistake if they assume that the emerging affluent investors will simply evolve into Boomers over time. Firms with the ability to recognize and address these changing needs will define success through the great wealth transfer.”
More key findings of the 2021 study:
- Younger investors crank up interaction during pandemic: More than half (55%) of full-service investors under age 40 prefer digital channels for communicating with their advisors vs. just 26% among older investors. More than two-thirds (71%) of full-service investors under age 40 have increased their frequency of interaction with their advisory firm during the pandemic, with phone (+33%), website (+25%), email (+24%) and mobile apps (+23%) emerging as the channels with the largest increases. By contrast, just 38% of investors age 40 and older increased their level of engagement during the past year.
- Younger investors twice as likely to make financial changes: During the past year, 58% of investors under age 40 made changes to their investment portfolios, such as increasing or decreasing investments, stopping recurring contributions or making withdrawals. During the same period, just 28% of investors age 40 and older made similar changes.
- ESG becomes key priority but many firms still fall short: Among investors under age 40 who strongly agree that their advisory firm is committed to ESG efforts, 52% say they plan to increase their investment with that firm. The number falls to just 24% among investors over age 40. Despite the positive influence ESG has among younger investors, 68% say they either have doubts about their firm’s commitment to ESG or don’t know about it.
- One-time fee-for-service and subscription payment models attractive to younger investors: Nearly three-fourths (74%) of investors under age 40 say they would prefer to pay for full-service wealth management via a one-time fee-for-service model. This is followed closely by a subscription model, which is supported by 73% of investors under age 40. By contrast, among full-service investors age 40 and older, just 42% support a fee-for-service model and 34% support a subscription model.
The study, now in its 19th year, is based on responses from 4,392 investors who make some or all of their investment decisions with a financial advisor. Fielded from Dec. 2020-Feb. 2021, the study was redesigned for 2021. As a result, scores are not comparable to those of previous years.
Later this year, J.D. Power is also expected to release its annual rankings of top Broker-Dealers ranked by advisors, and Top 401k Plan Providers.