J.D. Power and Associates Reports: Despite an Increase in Overall Satisfaction, Canadian Investors Have Diversified Their Portfolio Among More Firms

Raymond James Ltd. Ranks Highest among Full-Service Investment Firms in Canada for a Second Consecutive Year

TORONTO, June 15 2010 – Investor satisfaction has increased considerably from 2009 as the market recovers, but investors are taking a more cautious approach by diversifying their portfolios among more investment firms, according to the J.D. Power and Associates 2010 Canadian Full Service Investor Satisfaction StudySM released today.

The study finds that overall satisfaction with full service investment firms averages 735 on a 1,000-point scale, increasing by 42 points from 693 in 2009. However, only 14 percent of investors strongly agree that they feel loyal to their primary firm, compared with 21 percent in 2009. Similarly, only 13 percent of investors report that they are strongly committed to their primary firm, compared with 20 percent in 2009. In addition, the percentage of investments held with an investor’s primary firm has decreased slightly to 78 percent, on average, from 81 percent in 2009.

Although the Canadian economy has demonstrated signs of recovery, the study finds that fewer investors believe that Canada is out of the recession-53 percent, compared with 55 percent in 2009. Similarly, 43 percent believe that the Canadian stock market has bottomed out, while 58 percent said the same in 2009.

“As the economy recovers, investors are taking a more cautious approach, and are exploring their investment choices and using more firms to manage their assets, rather than keeping all their eggs in one basket,” said Lubo Li, senior director and leader of the financial services practice at J.D. Power and Associates, Toronto. “As the industry provides investors with more choices, the marketplace has become more competitive and clients have become more demanding. Understanding and meeting investor needs and expectations is key to ensuring loyalty.”

Now in its fifth year, the study provides benchmarks for investor satisfaction that allow individual investment institutions in Canada to evaluate how they compare to competitive firms. Seven factors are used to evaluate overall investor satisfaction with full-service investment firms and financial institutions that offer wealth management and private banking services: investment advisor; account offerings; investment performance; account information; fees; website; and problem resolution.

For a second consecutive year, Raymond James Ltd. ranks highest in investor satisfaction among full-service investment firms with a score of 759. Raymond James performs particularly well in the investment advisor, account offerings, investment performance and fees factors. RBC Dominion Securities follows in the rankings with a score of 744, performing particularly well in account information. Edward Jones ranks third with a score of 743.

“Investor satisfaction among bank-affiliated brokerage firms has improved substantially, with particular improvements in the areas of investment advisor and account information,” said Li. “These improvements indicate that bank-based firms are taking advantage of their financial strengths and existing relationships with clients to enhance the overall experience at the enterprise level.”

The study also finds the following key patterns among different generations of investors:

  • Among Generation X and Y investors (18 to 39 years old), two-thirds have investable assets that total less than $100,000. In comparison, nearly 60 percent of retired investors (65 years or older) have investable assets of more than $250,000.
  • Satisfaction averages 30 index points higher among retired investors, compared with Generation X and Y investors.
  • The average number of investor-initiated contacts in the past 12 months is 1.4 times higher among retired investors than among Generation X and Y investors.

The 2010 Canadian Full Service Investor Satisfaction Study is based on responses from 6,500 investors who use advice-based investment services with financial institutions in Canada. The study was fielded in May 2010.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a global information and education company providing knowledge, insights and analysis in the financial, education and business information sectors through leading brands including Standard & Poor’s, McGraw-Hill Education, Platts, and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2009 were $5.95 billion. Additional information is available at http://www.mcgraw-hill.com/.