Edward Jones ranks highest in investor satisfaction with full service brokerage firms, topping RBC Wealth Managementand Advisor Group according to the J.D. Power 2019 U.S. Full Service Investor Satisfaction Study.
The study, released March 14, measures overall investor satisfaction with 18 full-service investment firms based on eight factors including financial advisor; account information; investment performance; firm interaction; product offerings; commissions and fees; information resources; and problem resolution.
St. Louis-based Edward Jones scored 853 in overall satisfaction, 18 points over the industry average and five points higher than second-place RBC Wealth Management and seven higher than third-place Advisor Group. Morgan Stanley (844) and Charles Schwab (842) rounded out the top five among the 18 companies ranked.
“What a great honor it is to be recognized for what matters most, which is making a difference in the lives our clients,” said Edward Jones Managing Partner Penny Pennington. “We illustrate the value of the Edward Jones client experience every day and help our clients achieve financially what is most important to them. We can bring something truly special to clients who experience us. This is why we exist.”
2019 Customer Satisfaction Index Ranking
1) Edward Jones – 853
2) RBC – 848
3) Advisor Group – 846
4) Morgan Stanley – 844
5) Charles Schwab – 842
6) UBS – 840
7) Ameriprise – 838
8) Fidelity – 836
8) Raymond James – 836
INDUSTRY AVERAGE – 835
10) Wells Fargo Advisors – 829
11) Stifel, Nicolaus & Company – 827
12) Chase – 826
13) Merrill Lynch – 825
14) Citigroup – 820
14) Lincoln – 820
14) Northwestern Mutual – 820
17) LPL – 814
18) AXA Advisors – 797
Source: J.D. Power 2019 Full Service Investor Satisfaction Study
Overall satisfaction ratings decline
This year’s overall satisfaction ratings dropped compared to a year ago, illustrating investors’ increasingly negative perceptions of their investment performance.
The study’s authors note it was conducted largely in December 2018, when market volatility was at a four-year high and many investors were experiencing the worst returns since the financial crisis. Not surprisingly, investor satisfaction suffered, but amidst that struggle, important insights about what separates the best advisors in any market have emerged.
“In recent years, investor satisfaction with full-service advisors and wealth management firms had been buoyed by the prolonged bull market, but with challenging markets returning investors are increasingly reexamining the value of their advisor relationships,” said Mike Foy, Senior Director of Wealth Intelligence at J.D. Power. “What we have found is that it’s not enough just to maintain frequent communication with clients; advisors also need to effectively explain and manage expectations around performance. It can be a difficult conversation when clients are losing money, but advisors who fail to have those hard conversations are putting at risk both their future growth opportunities, resulting in reduced client referrals and, in more extreme situations, losing their current clients either to other advisors or to alternative service models.”
Key findings of the 2019 study
- Increased investor flight risk: Among investors whose advisor explained their 2018 investment performance, more than half (53%) indicate they “definitely will” recommend their advisor vs. 24% among those who did not receive an explanation of their performance. Additionally, while only 10% of the former group “definitely will” or “probably will” consider switching firms over the next year, that percentage doubles to 20% among the latter group.
- Performance declines affect high net worth satisfaction and loyalty: Since 2018, overall satisfaction with investment performance has declined 46 points (on a 1,000-point scale), but among high net worth investors (those with $1 millionor more in investable assets), the decline is 66 points. Wealthier investors not only have more to lose when markets decline, but also this group tends to be older, so they have a shorter time horizon for when the assets are needed, which can amplify the perceived effect.
- Boomers have increasing concerns about financial well-being: Three-fourths (75%) of Boomers and Pre-Boomers indicate they are the same or worse off than last year, up from 58% in 2018. This change in sentiment can affect the bottom line, as the percentage of investors who “definitely will” recommend their primary firm drops from 64% among those who say they’re “better off” to 49% among those who say they’re “about the same” and 41% among those who say they’re “worse off.”
- The missing digital link: Given the critical importance of effective communication across channels, it is vital that firms upgrade investors’ perceptions of their mobile capabilities. Mobile continues to be the channel with the lowest satisfaction among full-service investors across all generational segments, trailing both online/web and phone, and is especially low among Boomers (671) when compared with Gen X (787) and Millennials (853).
The U.S. Full Service Investor Satisfaction Study, now in its 17th year, is based on responses from 4,629 investors who make some or all of their investment decisions with a financial advisor, and was fielded from November 2018 through January 2019.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.