TORONTO: 18 June 2007 — Investors who use financial planning services are much more satisfied in their relationship with their firm than those who do not, according to the J.D. Power and Associates 2007 Canadian Full Service Investor Satisfaction StudySM released today.
Now in its second year, the study provides a benchmark for investor satisfaction and creates norms that allow individual investment institutions in Canada to evaluate how they compare to competitive firms. Six factors are utilized to evaluate overall investor satisfaction with full-service investment firms: account set-up and offerings; account statements; convenience; cost; investment advisor/team; and investment performance.
The study finds that while only 30 percent of investors report having a formal written financial plan, those who do report having much higher levels of satisfaction than investors without a plan. Additionally, among those investors who have a written plan, overall satisfaction with their investment firm is even higher when the plan is executed by their primary investment firm rather than a secondary firm, accountant, lawyer or themselves.
“Having a clear, formally written financial plan in place is not only beneficial to the investors, but also to the investment firm, as it gives them a much better idea of the expectations and financial goals of their customers,” said Charles Schade, senior director of research at J.D. Power and Associates. “Sitting down and developing a plan is also one key way to build the relationship between the advisor and investor, as interaction with the financial advisor has the most significant impact on overall satisfaction with a firm.”
Edward Jones ranks highest with an index score of 791 points on a 1,000-point scale, performing particularly well in investment advisor/team; investment performance; account statements; and account set-up and offerings. TD Waterhouse Private Investment Advice follows with 774 points, receiving high ratings from customers in the convenience factor, and ScotiaMcLeod ranks third with 766 points. Both TD Waterhouse and ScotiaMcLeod increased their satisfaction score by more than 20 index points from the 2006 study.
Overall, the industry average has improved to 763 index points in 2007 — up 15 points from the 2006 study. The increase in satisfaction is primarily driven by the banking-associated firms, while satisfaction with most non-banks has essentially remained flat from 2006 results. Specifically, banks have improved most within the investment performance factor.
“It is important to note that at nearly 60 months, we’re currently in the longest-running bull market Canada has seen in recent decades,” said Schade. “Performance plays an integral role in driving overall satisfaction, and customers who are feeling positive about their investments are generally happier. However, across the board, the investment arms of the banking institutions have been doing a better job of listening to their customers and being more attentive to their needs.”
Regarding image, the study also finds that firms that are perceived to have higher fees receive more positive satisfaction ratings from their investors than are firms perceived to have lower fees.
“Investors are generally more accepting of higher fees when their portfolio performance is strong,” said Schade. “Even investors who are paying more for product offerings and services generally feel as though they are getting more value for their money when the market is doing well.”
The 2007 Canadian Full Service Investor Satisfaction Study is based on responses from 3,357 investors who use full-service investment institutions. The study was fielded in April and May 2007.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The firm’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information, visit www.jdpower.com.
About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2006 were $6.3 billion. Additional information is available at www.mcgraw-hill.com.Tags: J.D. Power