DALBAR 2010 Brokerage Statements Results

Canadian Brokerage statements failing to deliver value to clients.

Toronto, ON — Wednesday June 14, 2010 — DALBAR’s 2010 Trends and Best Practices in Brokerage Statements looks to recognize those companies whose statements best meet investors’ needs. To match consumer needs and to reflect changes in the industry, DALBAR recently updated its evaluation criteria for testing investment account statements. Results from various inputs, such as advisory board meetings, consumer-facilitated sessions and advisor focus groups were consulted upon and factored into the updates.

Of particular note, DALBAR surveyed a large pool of investors about their preferences for statement content and design. The study asked investors to prioritize 17 possible statement features, ranging from graphic elements to specific types of informational content. According to the results, the five most important statement elements are:

  • Overall rate of return
  • Summary of fees charged
  • Sections that track investment goals and account growth
  • Sections that summarize account details
  • Asset allocation of accounts

With these results in mind, the top five ranked firms from this year’s study were:

The results of the study were startling. Half of the 16 firms evaluated failed to achieve 50 out of a possible 100 points, with the industry average at 50.98 points, a decline of 13.28 points from the previous study conducted. Today’s clients are expecting high levels of value from their financial statements, and Brokerage statements, many of which have remained unchanged since 2005, fail to measure up. This contrast in statement quality is especially apparent in comparison to other industry segments, such as Mutual Fund, which has continually strived to provide innovation in its statements.

The need for improvement is clear, according to Anita Lo, DALBAR’s Vice President of Canadian Strategy, as “It may be a daunting task, but firms need to keep up with the changing expectations of clients who deserve to have a clear and informative statement about their financial health.”

Several areas that were found to be lacking include offering rates of return values, charts and visual aids, market gain/loss reporting, and client messaging. These are statement features that are of vital importance to clients, and it is a clear indication that the Brokerage industry (with a few exceptions) is not providing the service or value that clients deserve.

DALBAR was disappointed to see scores decline so dramatically following the evolution of the statement evaluation criteria. Few best practices were observed, in stark contrast to statements provided in the U.S., which combined innovative design and graphic tools, with comprehensive and detailed account information. Canadian firms can no longer afford to linger behind the U.S. in terms of statement innovation — its clients are suffering as result, and it is time for firms north of the border to step up.

About DALBAR, Inc.

DALBAR, Inc., the nation’s leading financial services market research and consulting firm, is committed to raising the standards of excellence in the financial services industry. With offices in both the US and Canada, DALBAR develops standards for, and provides research, ratings, and rankings of intangible factors to the mutual fund, broker/dealer, life insurance, property and casualty, and managed account industries. They include investor behavior, customer satisfaction, service quality, communications, Internet services, and financial professional ratings. www.dalbar.com.